Two pensions

girlie1412

I hope that someone can answer.. my husband started receiving his deferred pension this month (he is 60) he is hoping to also retire from his own job and draw pension within next few months. For the purpose of tax would two pensions merge even tho both are from different employers and he will be paying tax only above the allowance or would second pension immediately attract tax if 20%. Both pensions when combined would give 22k per annum. Thanks for your reply’s 

af1963

He'd pay the appropriate tax on his total income, with the first chunk being covered by his personal allowance and therefore tax free.  Doesn't matter if that total income is from one source, two, or ten.

xylophone

If  each pension is under the Personal Allowance he might like to ask HMRC to give half the PA against each pension.

Has he obtained a state pension forecast?

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

Dazed_and_C0nfused

girlie1412 said:

I hope that someone can answer.. my husband started receiving his deferred pension this month (he is 60) he is hoping to also retire from his own job and draw pension within next few months. For the purpose of tax would two pensions merge even tho both are from different employers and he will be paying tax only above the allowance or would second pension immediately attract tax if 20%. Both pensions when combined would give 22k per annum. Thanks for your reply’s 

It may be that the first payment will be paid using the emergency tax code (1257L) and once HMRC receive details of the first payment they will review his tax code and issue updated ones to each pension company.

The same thing is likely to have happened with his deferred pension but that might mean he owes a bit of tax as would have received two lots of tax code allowances in one tax month.

This year might be a little messy tax wise with all the changes that are happening in this tax year

Start of tax year = Job
The  Job and deferred pension
The  Deferred pension only
Finally Deferred pension and new pension

Pat38493

On a running basis, he will pay the exact amount of tax due regardless how many sources his pensions are paid from.

The pensions stay as separate items but HMRC will receive the data they need to put the correct tax codes on each one.

But.... you may find that for the first month or two he pays too much tax on one or other pension until HMRC assign the correct codes, it will then regularise in the following months.  Worst case he would have to contact HMRC to get a refund or check the position but usually it happens anyway.

Nebulous2

Is he registered on Gov.uk to check his tax status? 

There is a facility there to add / change sources of income, and I've found the tax system to be responsive when you do that. 

I've two sources of income, a pension and part-time earnings. As my pension is over the annual allowance my tax code is allocated to that, and I have a basic rate tax code for my part-time job, which means everything I earn there is taxed at basic rate. 

girlie1412

xylophone said:

If  each pension is under the Personal Allowance he might like to ask HMRC to give half the PA against each pension.

Has he obtained a state pension forecast?

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

Yes state pension forecast was checked and full state pension is payable at 67 as 43 years of national insurance are paid. 

Dazed_and_C0nfused

girlie1412 said:

xylophone said:

If  each pension is under the Personal Allowance he might like to ask HMRC to give half the PA against each pension.

Has he obtained a state pension forecast?

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

Yes state pension forecast was checked and full state pension is payable at 67 as 43 years of national insurance are paid. 

Having 43 years of NI doesn't always guarantee the standard new State Pension.

Have you read the forecast in full, in particular the actual amount accrued to date rather than what can be accrued?

girlie1412

Dazed_and_C0nfused said:

girlie1412 said:

I hope that someone can answer.. my husband started receiving his deferred pension this month (he is 60) he is hoping to also retire from his own job and draw pension within next few months. For the purpose of tax would two pensions merge even tho both are from different employers and he will be paying tax only above the allowance or would second pension immediately attract tax if 20%. Both pensions when combined would give 22k per annum. Thanks for your reply’s 

It may be that the first payment will be paid using the emergency tax code (1257L) and once HMRC receive details of the first payment they will review his tax code and issue updated ones to each pension company.

The same thing is likely to have happened with his deferred pension but that might mean he owes a bit of tax as would have received two lots of tax code allowances in one tax month.

This year might be a little messy tax wise with all the changes that are happening in this tax year

Start of tax year = Job
The  Job and deferred pension
The  Deferred pension only
Finally Deferred pension and new pension

His first deferred pension arrived under BR tax code which is right as his allowance is used for his current job which he is planning to retire from 1/11/23. 

So yes this year will potentially be messy and call to HMRC will possibly be required and once both pensions are payable 

Albermarle

girlie1412 said:

Dazed_and_C0nfused said:

girlie1412 said:

I hope that someone can answer.. my husband started receiving his deferred pension this month (he is 60) he is hoping to also retire from his own job and draw pension within next few months. For the purpose of tax would two pensions merge even tho both are from different employers and he will be paying tax only above the allowance or would second pension immediately attract tax if 20%. Both pensions when combined would give 22k per annum. Thanks for your reply’s 

It may be that the first payment will be paid using the emergency tax code (1257L) and once HMRC receive details of the first payment they will review his tax code and issue updated ones to each pension company.

The same thing is likely to have happened with his deferred pension but that might mean he owes a bit of tax as would have received two lots of tax code allowances in one tax month.

This year might be a little messy tax wise with all the changes that are happening in this tax year

Start of tax year = Job
The  Job and deferred pension
The  Deferred pension only
Finally Deferred pension and new pension

His first deferred pension arrived under BR tax code which is right as his allowance is used for his current job which he is planning to retire from 1/11/23. 

So yes this year will potentially be messy and call to HMRC will possibly be required and once both pensions are payable 

Worth noting that nothing can be done about his second pension until it actually comes into payment. You can not pre empt it by calling HMRC in advance, as they will have no record of it until after the first payment is made, then the pension company will tell them the details.
As @Nebulous2 says he should register for an online personal tax account as sometimes you can sort these issues out this way, rather than calling them which can mean a long wait.