Paying tax on annuity payments

Jonty6262

Annuity has just started in payment(Aviva). I have no other income. It is an annuity that is paying 6k per year. Not getting SP so just £500 a month income. They are taxing the £500 a month.Is this the norm.if not how do I go about stopping tax being taken on payment?Thanks.

Dazed_and_C0nfused

Jonty6262 said:

Annuity has just started in payment(Aviva). I have no other income. It is an annuity that is paying 6k per year. Not getting SP so just £500 a month income. They are taxing the £500 a month.Is this the norm.if not how do I go about stopping tax being taken on payment?Thanks.

I think they should have used the emergency tax code (1257L) on the first payment meaning no tax would have been deducted.

HMRC should send them a code once the first payment has reported and they (Aviva) will refund any tax overpaid once they use that.

xylophone

If £6000 a year is your only income then you are well within your tax free allowance.

Is a tax code shown on the payment advice?

If so, what is it?

Do you have access to your personal tax account?

https://www.gov.uk/personal-tax-account

Have you obtained a new state pension forecast?

https://www.gov.uk/check-state-pension

Jonty6262

Dazed_and_C0nfused said:

Jonty6262 said:

Annuity has just started in payment(Aviva). I have no other income. It is an annuity that is paying 6k per year. Not getting SP so just £500 a month income. They are taxing the £500 a month.Is this the norm.if not how do I go about stopping tax being taken on payment?Thanks.

I think they should have used the emergency tax code (1257L) on the first payment meaning no tax would have been deducted.

HMRC should send them a code once the first payment has reported and they (Aviva) will refund any tax overpaid once they use that.

xylophone said:

If £6000 a year is your only income then you are well within your tax free allowance.

Is a tax code shown on the payment advice?

If so, what is it?

Do you have access to your personal tax account?

https://www.gov.uk/personal-tax-account

Have you obtained a new state pension forecast?

https://www.gov.uk/check-state-pension

Tax code 1131NX (I transfer 10% to my partner)code sent by hmrc prior to first payment of annuity

Full SP when I take it but the earliest I can take it is Feb 24

Yes I have access to tax account.

My online tax account  says "income tax estimate 0"

Dazed_and_C0nfused

Jonty6262 said:

Dazed_and_C0nfused said:

Jonty6262 said:

Annuity has just started in payment(Aviva). I have no other income. It is an annuity that is paying 6k per year. Not getting SP so just £500 a month income. They are taxing the £500 a month.Is this the norm.if not how do I go about stopping tax being taken on payment?Thanks.

I think they should have used the emergency tax code (1257L) on the first payment meaning no tax would have been deducted.

HMRC should send them a code once the first payment has reported and they (Aviva) will refund any tax overpaid once they use that.

xylophone said:

If £6000 a year is your only income then you are well within your tax free allowance.

Is a tax code shown on the payment advice?

If so, what is it?

Do you have access to your personal tax account?

https://www.gov.uk/personal-tax-account

Have you obtained a new state pension forecast?

https://www.gov.uk/check-state-pension

Tax code 1131NX (I transfer 10% to my partner)code sent by hmrc prior to first payment of annuity

Full SP when I take it but the earliest I can take it is Feb 24

Yes I have access to tax account.

My online tax account  says "income tax estimate 0"

I don't know how that was possible but tax code 1131N means Aviva could pay £943 each month without having to deduct any tax.

Maybe the code was issued just after the first payment?

Jonty6262

I forgot to mention. The first payment I had was just after this new tax year began 11 April and that was 2 months payment. That payment wasn't taxed at all. This payment has been taxed. 

Jonty6262

Is it possible that Aviva hadn't got my tax code when they processed the second payment today? But that wouldn't make sense to me because they made a first payment with no tax deducted. 

Dazed_and_C0nfused

It seems like the problem could be that you have received 3 months worth of pension (~£1,500 gross) in one tax month.

So tax would be owed on that.

But if you only get £500 in month 2 of the tax year (6 May to 5 June) then you will get most, if not all, of the tax back.

You just need to ask HMRC to issue the 1131N code on a cumulative basis i.e. 1131N, not 1131NX.

Jonty6262

Dazed_and_C0nfused said:

It seems like the problem could be that you have received 3 months worth of pension (~£1,500 gross) in one tax month.

So tax would be owed on that.

But if you only get £500 in month 2 of the tax year (6 May to 5 June) then you will get most, if not all, of the tax back.

You just need to ask HMRC to issue the 1131N code on a cumulative basis i.e. 1131N, not 1131NX.

I think you may have just explained what's happened. Thank you. 

xylophone

You mention that you expect full NSP if you claim in February 2024.

This will be £203.85 a week.

You would still be within your PA for 2023/24 but 2024/5 would be a  different story.

Will you cease to claim Marriage Allowance?

Jonty6262

xylophone said:

You mention that you expect full NSP if you claim in February 2024.

This will be £203.85 a week.

You would still be within your PA for 2023/24 but 2024/5 would be a  different story.

Will you cease to claim Marriage Allowance?

Do you mean will I stop giving my partner 10% of my allowance. We are going to look at that arrangement nearer the time as at present my partner will still be in full time employment but that may change in this tax year.