State Pension new Tax Code

Suppers_Ready

Hi , some help (as always ) please .

 I receive a company pension approx 16k/year , last week I started my state pension and my Tax Code has changed from 1257L/C to 507L/M1  ?

Silvertabby

Your State pension is taxable income, but DWP can't/won't take the tax at source, so they tell HMRC how much you are receiving.   HMRC then take the tax due from your State pension from your other income, by adjusting your tax code.  

Be glad that DWP/HMRC are on the ball!  I've recently received my second State pension payment, but no sign of my new tax coding yet.  Will (try to) ring them this afternoon before my debt gets any worse.

ADD.  Your tax code will change again once the 6 years of voluntary Class 3s you have paid are reflected in your State pension payments.

Suppers_Ready

Silvertabby said:

Your State pension is taxable income, but DWP can't/won't take the tax at source, so they tell HMRC how much you are receiving.   HMRC then take the tax due from your State pension from your other income, by adjusting your tax code.  

How would they get the tax from my state pension if I didn't have another in come ?

TadleyBaggie

Since the state pension amount (~9.5K) is likely to be less than your personal allowance (~12.5K), no tax would be due.

p00hsticks

As an aside - that tax code reduction suggests that you're getting less than the maximium possible new State Pension (c £7500 a year compared with the full amount of around around £9,600 a year).

If that is indeed the case, then it's worth checking if you have any gaps in your NI record over the last few years as if you have, paying voluntary contributions would be a very good investment - each post-2016 year bought at a one-off cost of around £800 potentially increases your State Pension by £5 a week up to the maximum £185.15.

Unfortunately as you've now reached State Pension age I don't think you'll be able to get a personalised State Pension forecast online any longer, but if you call the Future Pension Centre they should be able to advise you.

https://www.gov.uk/future-pension-centre

liz_bartun

Suppers_Ready said:

Silvertabby said:

Your State pension is taxable income, but DWP can't/won't take the tax at source, so they tell HMRC how much you are receiving.   HMRC then take the tax due from your State pension from your other income, by adjusting your tax code.  

How would they get the tax from my state pension if I didn't have another in come ?

Presumably your state pension is less than £12570 per year.

You mention the "C" (Wales) in your original tax code? Shouldn't it be in the new one too? You don't mention it there.

Suppers_Ready

liz_bartun said:

Suppers_Ready said:

You mention the "C" (Wales) in your original tax code? Shouldn't it be in the new one too? You don't mention it there.

 Odd I don't live in Wales .

Suppers_Ready

p00hsticks said:

As an aside - that tax code reduction suggests that you're getting less than the maximium possible new State Pension (c £7500 a year compared with the full amount of around around £9,600 a year).

If that is indeed the case, then it's worth checking if you have any gaps in your NI record over the last few years as if you have, paying voluntary contributions would be a very good investment - each post-2016 year bought at a one-off cost of around £800 potentially increases your State Pension by £5 a week up to the maximum £185.15.

I have paid Voluntary NI contibutions a month before my State Pension , it's hasn't been recalculated yet .

liz_bartun

Suppers_Ready said:

liz_bartun said:

Suppers_Ready said:

You mention the "C" (Wales) in your original tax code? Shouldn't it be in the new one too? You don't mention it there.

 Odd I don't live in Wales .

If it's the "C" for Wales it should be at the front anyway. I've never seen one at the end like that. Very odd.

molerat

liz_bartun said:

Suppers_Ready said:

liz_bartun said:

Suppers_Ready said:

You mention the "C" (Wales) in your original tax code? Shouldn't it be in the new one too? You don't mention it there.

 Odd I don't live in Wales .

If it's the "C" for Wales it should be at the front anyway. I've never seen one at the end like that. Very odd.

Cumulative, a 3 letter shortened version is often used  (but the forum censor blocks it) on pay slips.

Suppers_Ready

How did they come about that new code of 507L/M1 ?
I reckon I'll be paying more than 20% on my cumulative total income .