Trying to get my head around my new tax code

unforeseen

Just got my tax code for the coming year and trying to understand it. My State pension started last month so this is the first time it has appeared
Am I correct in thinking that I will pay 20% on all of my pay plus the additional £3322? I realise that my armed forces pension is BR and paying tax on all of it.

If it helps, my pay is £28k pa and my AF pension around £18k pa

Dazed_and_C0nfused

You are on the right lines.

Basic rate tax is deducted from the armed forces pension.

£3319 is added to your pay when calculating the tax due on that.  So effectively basic rate tax plus an extra £55 each month.

And no tax is deducted from the State Pension.

In these circumstances it would be prudent to check HMRC's estimate of your pay and armed forces pension is what you're expecting otherwise the adjustment to rate band could be insufficient leaving you owing money at the end of the tax year.

HMRC tend to estimate things using past history whereas you are more likely to know what the future holds, for example the armed forces pension might get a ~10% increase?

jimmo

That's right but on your figures you not pay sufficient tax.

 

SP	£10581
Pay	28000
AFP	18000

 

Total

56581

 

Deduct PA	12570
Taxable	44011

Tax Due

37700	@20%	£7540.00
6311	@20%	£2524.40

Total tax due = £10064.40

 

Tax deducted:

Pay	31322 @ 20%	£6264.40
AFP	18000@20%	£3600.00

Total tax deducted= £9864.40

 

You will owe £200.00.

molerat

I would certainly check what they think your AFPS is, they reckon mine will be less than last year !

unforeseen

Thanks all. I used last year's AFP and added plus10.1‰ although it hasn't been announced yet.

At least they are only out by about £200 on the tax. However the figure for my pay is gross and doesn't take account of pension deductions so the actual taxable amount will be less.
Last year they reckoned I would earn £96000! I got over £2000 back once the managed to get their ducks in a row. 

molerat

molerat said:

I would certainly check what they think your AFPS is, they reckon mine will be less than last year !

My AFPS new rates dropped on the doormat this morning.  Spot on with my calculation, I even managed to get the April payment within 3p. Never done that before and I didn't make a note of how I did it