Sorry but another pension/tax code question!

Pushcaddy

 Hi,
I received my government pension from May this year, I reduced my working hours from May also, my current earnings from both are below 22k a year! My tax code prior to May was 1263L from May it became 300LX so in essence I am not earning any more than I was before but paying significantly more tax. Any advice would be greatly appreciated many thanks..

XzavierWalnut

It's a little trick the government do not tell anyone, but when you get your state pension the full amount is taken off your tax code.

Flugelhorn

that is the tax on your pension, it is taken off earned income

Brie

Doesn't it mean that there is no tax deducted from the SP?

dunstonh

 I am not earning any more than I was before but paying significantly more tax. 

The state pension is not paid via PAYE.   it is paid gross.   So, that needs to be factored against your tax code.  Hence the reduction in your tax code.

Pat38493

This seems normal - the state pension is taxable but it’s paid gross, so they have to collect the tax from your salary (if state pension was your only income it would be within the personal allowance so no tax would actually be due).

german_keeper

If you think you have paid more tax than you should have it may be the x on your tax code which makes it non cumulative.

I have a DB pension of about £10.2k and started drawdown of my DC this tax year. So with marriage allowance I decided to take £300 per month from my DC to leave me at PTA so no tax to pay. I updated my Personal Tax Account and was given a tax code for DC of 360TX. I don't know much about the more complex areas of coding so thought that looked right.

In May my DC provider deducted about 50 quid tax. I assumed this would be refunded the following month but it wasn't. I called HMRC and the chap explained it was because the x made the code non cumulative so the incorrect tax paid in May wouldn't be automatically refunded. He just removed the x from the code and I am hoping that next week's payment will include the rebate.

So a call to HMRC should sort the matter out or at least confirm if it's correct and why.

molerat

Pushcaddy said:

 Hi,
I received my government pension from May this year, I reduced my working hours from May also, my current earnings from both are below 22k a year! My tax code prior to May was 1263L from May it became 300LX so in essence I am not earning any more than I was before but paying significantly more tax. Any advice would be greatly appreciated many thanks..

If you earned £22K per year with a code of 1263 you would pay £154 tax per month

If you earned £12370 per year and received £9630 state pension per year with a code of 300 you would pay £154 tax per month.

How do you figure you are paying significantly more tax ?

Silvertabby

XzavierWalnut said:

It's a little trick the government do not tell anyone, but when you get your state pension the full amount is taken off your tax code.

It's not a 'little trick', it's long established normal procedure.

XzavierWalnut

Silvertabby said:

XzavierWalnut said:

It's a little trick the government do not tell anyone, but when you get your state pension the full amount is taken off your tax code.

It's not a 'little trick', it's long established normal procedure.

Let's say it's not very well advertised then.

Dazed_and_C0nfused

It's on gov.uk, here for example.

https://www.gov.uk/tax-on-pension/how-your-tax-is-paid