Retired and taxed

unholyangel

 OP will be on a w1/m1 code due to it being the first year state pension is paid. So it's not going to refund any overpaid tax until the end of year. 
 

Dazed_and_C0nfused

unholyangel said:

 OP will be on a w1/m1 code due to it being the first year state pension is paid. So it's not going to refund any overpaid tax until the end of year. 
 

So you think 449L on a w1/m1 basis would result in a 50% tax deduction from £146 🤔

Private Pension 1 current figures Annual pension £1761.72 Tax code 449L
Paid 31/08/22 Gross £146.81..
Tax £73.40...Net£73.41

magicman62

Thanks for all the replies, i don't profess to understand it all, but you pay tax when you work to make life a little easier for when you get to retirement and then you are not safe you then.pay tax on.it again...i think I would be better off going back to work because the bottom line is I earnt more and paid less tax,  a lot less tax, I think the system is despicable... However thanks everyone gor the input..

magicman62

Ps if there are any further developments I will post to the thread again,  I know it will.do no good but a have sent my MP a real stinker...

eskbanker

magicman62 said:

Thanks for all the replies, i don't profess to understand it all, but you pay tax when you work to make life a little easier for when you get to retirement and then you are not safe you then.pay tax on.it again...i think I would be better off going back to work because the bottom line is I earnt more and paid less tax,  a lot less tax, I think the system is despicable... However thanks everyone gor the input..

magicman62 said:

Ps if there are any further developments I will post to the thread again,  I know it will.do no good but a have sent my MP a real stinker...

Probably best to make sure you understand it before (over)reacting and sounding off indignantly like that!

The bottom line is that if your total taxable earnings exceed £12,570 over the year then you'll pay some tax, whereas if your income is below that then you won't, even though there may be deductions temporarily applied prior to reversal later on - it's important to recognise that PAYE deductions via tax codes won't always be spot on when there are multiple income streams and changes during the year, but it should all come out in the wash.

macman

magicman62 said:

Thanks for all the replies, i don't profess to understand it all, but you pay tax when you work to make life a little easier for when you get to retirement and then you are not safe you then.pay tax on.it again...i think I would be better off going back to work because the bottom line is I earnt more and paid less tax,  a lot less tax, I think the system is despicable... However thanks everyone gor the input..

So you thought that no one pays tax in retirement, and that pension income was tax-free?
I don't think you have understood how the tax coding works, what do you think your MP is able to do about this?

magicman62

I am ending this thread, I was a engineer for for over 40 years, I was not a accountant I was not a tax guru I paid my taxes on time without question...I was told by the tax people that I would be in a tax exemption band, and yes I did ask, only to find everything was different yes I am angry I see the figures 12500 tax free I don't earn that so I see 0 tax. From my enquiries with friends, family and other sources it looks like I am not the only one,

However many thanks to the people who have taken the time to try and enlighten me some of it has made sense,

eskbanker

magicman62 said:

I am ending this thread, I was a engineer for for over 40 years, I was not a accountant I was not a tax guru I paid my taxes on time without question...I was told by the tax people that I would be in a tax exemption band, and yes I did ask, only to find everything was different yes I am angry I see the figures 12500 tax free I don't earn that so I see 0 tax. From my enquiries with friends, family and other sources it looks like I am not the only one,

However many thanks to the people who have taken the time to try and enlighten me some of it has made sense,

You're evidently very confused about the situation, so people have been trying to explain and clarify it to you, but seemingly without success, which is presumably why you still feel angry because you're not understanding it.

The point that several of us were trying to explain was that income tax liabilities are calculated based on your total income over the tax year, and that tax codes and corresponding PAYE deductions don't necessarily reflect that entire position - this doesn't really mean that they're inherently wrong, but it does sometimes take time for everything to stabilise.

If you work out your total expected income for the 2022/23 tax year from employment and all pensions, then if you're on the right side of £12,570, you won't have any liability for income tax - it is possible that your prior deductions won't all have been reversed by then but if this is the case then you can reclaim it, but that can only really be done once total tax year income is visible.

chrisbur

What seems a little unusual here is that HMRC reduced the tax code from 936T to 449L and appear to have used a cumulative tax code.  In my time a reduction in tax code of this sort of figure would have been applied on a non-cumulative basis, resulting in no tax being deducted from the pension.

unholyangel

Dazed_and_C0nfused said:

unholyangel said:

 OP will be on a w1/m1 code due to it being the first year state pension is paid. So it's not going to refund any overpaid tax until the end of year. 
 

So you think 449L on a w1/m1 basis would result in a 50% tax deduction from £146 🤔

Private Pension 1 current figures Annual pension £1761.72 Tax code 449L
Paid 31/08/22 Gross £146.81..
Tax £73.40...Net£73.41

 If they're following their own guidance, it should be a non cumulative code. 

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76086