Tax on savings on receipt of pension

Dazed_and_C0nfused

1.  In what way was it incorrect?

2.  The emergency tax code (1257L) is actually better than the one someone applying for Marriage Allowance would have!

3.  Normal at this time of year, banks have until 30 June to submit them to HMRC and then presumably it takes HMRC some time to match them all up with everyone's tax records.

4.  Sounds highly unlikely, HMRC have measures in place to automatically update records where employers stop sending Real Time Information reports.

Downthedrain

Apologies for the delayed reply;

The adviser said her code should be 1119N. The online system showed her previous employer as providing her pension, not her pension provider - the adviser said this was because her P45 had never been updated.

She's just received a letter with the tax code change. I'm not clear why there's a figure of £114 against 'less untaxed interest' - ' this doesn't correlate with anything, and the interest earned would not be taxable anyhow according to Note 2 on the back of the form - this says the amount stated takes into account any Starter Savings Rate or Personal Savings Allowance.

Dazed_and_C0nfused

If it's not in an ISA (or some NS&I accounts) the interest would be taxable.

But there may not be any tax to pay on it as previously explained.

It's likely to be £114 is the latest untaxed interest figure HMRC have for your wife.  Either from 2020:21, 2021:22 or a mix of the two years given its not long after the deadline for banks to provide interest figures for 2021:22.

As she has spare Personal Allowance some have been used by the interest.  It doesn't look like she can avail herself of either the savings starter rate band or savings nil rate.

Do you have a concern about a tax code of 1119N being used against a pension of £8,000?

Downthedrain

No concerns about that tax code for an £8,000 pension. Mostly, savings are in non-taxable accounts (as you say, NS&I and ISAs) - the main consideration being that we maximise the total tax-free allowances when moving money around between us that is in taxable savings .

Dazed_and_C0nfused

Well she can earn £3k+ plus in interest before she even gets into the savings 0% tax rates never mind 20%.

Downthedrain

Thank you very much for the assistance and clarification - I really appreciate the help.