Is my sums corrected

Sharktail

Hi
 all
i received 8 year fixed term annuity quote online just wondering if my math is correct,
No other income in this period 

210k @
8year taking no tax free upfront
2501 per month 
trying to work out tax payable 
tax code 13827 inc marriage allowance 
so my workings are 
625 per month tax free
1876 taxable 
144 tax paid per month hope this is correct
TIA

molerat

Assuming England / Wales (A marriage allowance recipient usually has a code of 1383 as £1260 is added to the £12570)

£2501 per month on a tax code of 1383 will be £1153.26 pm tax allowance leaving £1347 taxable paying £269.40 pm tax leaving £2231.60 net.  When you commence will of course make a difference.

Sharktail

Hi
but I’m not taking 25% tax free upfront thought this would be deducted prior to taxable amount ie 25%of 2501

molerat

An annuity is usually bought from the taxable element, you are buying an insurance product providing a fully taxable income not a pension product with a tax free element. https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/guaranteed-retirement-income-annuities-explained

badmemory

I would say that is a no, unless my maths is incorrect.  Annual income £30012 less (I am assuming tax allowance is 13827 not tax code which would be 1383) 13827 = £16185 @ 20% = £3237 pa = £270 per month tax.  But that will be for a full tax year not Oct to Mar with no other income.  I suspect more info needed here.

Sharktail

But surely I’m not needing /planning on taking 25% tax free at the onset unless I have to , so I would have thought 2501 less 25% tax free would equal my workings 
2501 minus 25% =625 tax free amount leaves
1876 taxable @ 20% less taxable allowance  

molerat

An annuity is simply using a lump of money to buy a taxable income, there is no tax free element outside of your personal tax allowance.  You can do what you wish with that tax free 25% from the pension but if you buy an annuity with it the income from that annuity has no tax free status.  There are possibly better ways of utilising that tax free amount which will maintain its tax free status.

Sharktail

Thanks for that didn’t know that , better to take upfront & invest/save I guess