Tax on pension

WYSPECIAL

Hi,

I receive a pension which has always been allocated a tax code of BR.

Not a problem as earned income from a job used all of my tax code of 1263L.

Next tax year I am reducing my hours so after salary sacrifice and AVC contributions my earnings will not use all of my tax code up and the pension I receive will be my main income.

I was hoping to have the majority of the tax allowance allocated to the pension and not pay any tax on it and then pay all the tax due from earned income. However when I have put my estimated figures into Gov.UK they have allocated it the opposite way round.

Is there a way to get it changed around or is it not possible to choose how your tax allowance is split across two sources of income? 

eskbanker

Not sure if there is latitude within HMRC's processes to do what you suggest, but if the net result is the same amount of tax payable, why would it matter?

Dazed_and_C0nfused

WYSPECIAL said:

Hi,

I receive a pension which has always been allocated a tax code of BR.

Not a problem as earned income from a job used all of my tax code of 1263L.

Next tax year I am reducing my hours so after salary sacrifice and AVC contributions my earnings will not use all of my tax code up and the pension I receive will be my main income.

I was hoping to have the majority of the tax allowance allocated to the pension and not pay any tax on it and then pay all the tax due from earned income. However when I have put my estimated figures into Gov.UK they have allocated it the opposite way round.

Is there a way to get it changed around or is it not possible to choose how your tax allowance is split across two sources of income? 

Yes it is but what you've done is simply specify what (taxable) income will be expected from each source.

You actually want the pension to become your main PAYE source and the job your second source.

So the pension will have an L code and the job a T code.  Or BR if your pension uses all your tax code allowances.

Say the pension is £9,000 then the tax codes would be,

Pension 900L
Job 363T

Just make it clear to HMRC that you only what this to apply from 6 April 2023, not for the current tax year.

WYSPECIAL

Dazed_and_C0nfused said:

WYSPECIAL said:

Hi,

I receive a pension which has always been allocated a tax code of BR.

Not a problem as earned income from a job used all of my tax code of 1263L.

Next tax year I am reducing my hours so after salary sacrifice and AVC contributions my earnings will not use all of my tax code up and the pension I receive will be my main income.

I was hoping to have the majority of the tax allowance allocated to the pension and not pay any tax on it and then pay all the tax due from earned income. However when I have put my estimated figures into Gov.UK they have allocated it the opposite way round.

Is there a way to get it changed around or is it not possible to choose how your tax allowance is split across two sources of income? 

Yes it is but what you've done is simply specify what (taxable) income will be expected from each source.

You actually want the pension to become your main PAYE source and the job your second source.

So the pension will have an L code and the job a T code.  Or BR if your pension uses all your tax code allowances.

Say the pension is £9,000 then the tax codes would be,

Pension 900L
Job 363T

Just make it clear to HMRC that you only what this to apply from 6 April 2023, not for the current tax year.

Yes that’s exactly what I want to do but there’s doesn’t seem to be any means on Gov.UK to send a message about it.
 Is ringing them the only option?

Flugelhorn

Can you change it in your tax account?

Albermarle

WYSPECIAL said:

Dazed_and_C0nfused said:

WYSPECIAL said:

Hi,

I receive a pension which has always been allocated a tax code of BR.

Not a problem as earned income from a job used all of my tax code of 1263L.

Next tax year I am reducing my hours so after salary sacrifice and AVC contributions my earnings will not use all of my tax code up and the pension I receive will be my main income.

I was hoping to have the majority of the tax allowance allocated to the pension and not pay any tax on it and then pay all the tax due from earned income. However when I have put my estimated figures into Gov.UK they have allocated it the opposite way round.

Is there a way to get it changed around or is it not possible to choose how your tax allowance is split across two sources of income? 

Yes it is but what you've done is simply specify what (taxable) income will be expected from each source.

You actually want the pension to become your main PAYE source and the job your second source.

So the pension will have an L code and the job a T code.  Or BR if your pension uses all your tax code allowances.

Say the pension is £9,000 then the tax codes would be,

Pension 900L
Job 363T

Just make it clear to HMRC that you only what this to apply from 6 April 2023, not for the current tax year.

Yes that’s exactly what I want to do but there’s doesn’t seem to be any means on Gov.UK to send a message about it.
 Is ringing them the only option?

You can not send just a message as such. If you have an online personal tax account, you can request a change of tax code, as long as you give a reason. However not sure if you can request a different sharing of a tax code between two income streams.

t0rt0ise

WYSPECIAL said:

Dazed_and_C0nfused said:

WYSPECIAL said:

Hi,

I receive a pension which has always been allocated a tax code of BR.

Not a problem as earned income from a job used all of my tax code of 1263L.

Next tax year I am reducing my hours so after salary sacrifice and AVC contributions my earnings will not use all of my tax code up and the pension I receive will be my main income.

I was hoping to have the majority of the tax allowance allocated to the pension and not pay any tax on it and then pay all the tax due from earned income. However when I have put my estimated figures into Gov.UK they have allocated it the opposite way round.

Is there a way to get it changed around or is it not possible to choose how your tax allowance is split across two sources of income? 

Yes it is but what you've done is simply specify what (taxable) income will be expected from each source.

You actually want the pension to become your main PAYE source and the job your second source.

So the pension will have an L code and the job a T code.  Or BR if your pension uses all your tax code allowances.

Say the pension is £9,000 then the tax codes would be,

Pension 900L
Job 363T

Just make it clear to HMRC that you only what this to apply from 6 April 2023, not for the current tax year.

Yes that’s exactly what I want to do but there’s doesn’t seem to be any means on Gov.UK to send a message about it.
 Is ringing them the only option?

Yes you need to ring them. They will move tax codes around just as you want. I have done this in the past but didn't bother this year as it really makes no difference and my spreadsheet works it out just the same.