How will I be taxed?

CEON44

In few weeks I turn 66 and will receive state pension. I currently get an income from private pension but pay no tax as the amount I get is under the threshold. But when i start to receive the state pension I will be over the threshold so I wondered how will I pay tax due. Will tax be taken automatically and I dont need to do anything or do I need to fill in forms or contact HMRC? 

etienneg

DWP will automatically inform HMRC what you will be paid in state pension (and annual increases thereafter). State pension is always paid without deduction of tax, but as you know what matters as regards tax to be paid is your total income. HMRC will calculate what this will be and issue a new tax code to your private pension provider. So you will start to have tax deducted from this pension.
If the calculation is correct you will pay the right amount of tax over the year. But what often happens in the year you start getting state pension is that a full year of state pension is included in the HMRC calculation, whereas you will likely start getting it at some point during the year. So you may have too much tax deducted during that year, which will be corrected at the end of the year by HMRC (or you can apply for a correction to be made earlier). After the first year it will all settle down.
So you don't need to do anything, but it's as well to keep an eye on things, particularly at the beginning, to make sure that you end up paying the right amount of tax.

[Deleted User]

etienneg said:

DWP will automatically inform HMRC what you will be paid in state pension (and annual increases thereafter). State pension is always paid without deduction of tax, but as you know what matters as regards tax to be paid is your total income. HMRC will calculate what this will be and issue a new tax code to your private pension provider. So you will start to have tax deducted from this pension.
If the calculation is correct you will pay the right amount of tax over the year. But what often happens in the year you start getting state pension is that a full year of state pension is included in the HMRC calculation, whereas you will likely start getting it at some point during the year. So you may have too much tax deducted during that year, which will be corrected at the end of the year by HMRC (or you can apply for a correction to be made earlier). After the first year it will all settle down.
So you don't need to do anything, but it's as well to keep an eye on things, particularly at the beginning, to make sure that you end up paying the right ‘full year of state pension amount of tax.

The point regarding the coding of the ‘full year of the state pension’ is not completely correct. While the full amount will appear on the code it will be applied on a month 1 basis in order that you DON’T have excessive tax deducted. In other words, it only applies from when the state pension commenced and not retrospectively.