Tax Code

mkcj

I have taken a small payment from a personal pension.

I thought this would mean that I could take a larger payment later in the year without paying tax.

However Hargreaves Lansdown have informed me that they have received an M1 code. Also my tax free interest from last year has been taken off the code therefore making my tax free income for this year less. I would not expect to pay interest on savings this year.

Any advice would be very much appreciated.

Thank you.

Dazed_and_C0nfused

mkcj said:

I have taken a small payment from a personal pension.

I thought this would mean that I could take a larger payment later in the year without paying tax.

However Hargreaves Lansdown have informed me that they have received an M1 code. Also my tax free interest from last year has been taken off the code therefore making my tax free income for this year less. I would not expect to pay interest on savings this year.

Any advice would be very much appreciated.

Thank you.

The interest deduction will be because, based on HMRC's estimate of your pension income, you will have some spare Personal Allowance and that is used before either of the 0% tax rates applicable to interest.

You can update the expected (taxable) pension income in your Personal Tax Account and if there are no spare Personal Allowances left that will remove the interest deduction.

Not sure why it would be on a non cumulative basis though?

What taxable income have you had earlier in the current tax year?

mkcj

Dazed_and_C0nfused said:

mkcj said:

I have taken a small payment from a personal pension.

I thought this would mean that I could take a larger payment later in the year without paying tax.

However Hargreaves Lansdown have informed me that they have received an M1 code. Also my tax free interest from last year has been taken off the code therefore making my tax free income for this year less. I would not expect to pay interest on savings this year.

Any advice would be very much appreciated.

Thank you.

The interest deduction will be because, based on HMRC's estimate of your pension income, you will have some spare Personal Allowance and that is used before either of the 0% tax rates applicable to interest.

You can update the expected (taxable) pension income in your Personal Tax Account and if there are no spare Personal Allowances left that will remove the interest deduction.

Not sure why it would be on a non cumulative basis though?

What taxable income have you had earlier in the current tax year?

Thank you.

I receive Carers allowance which is a fixed amount for the year. I have written to them informing then of this and my understanding is my personal allowance will be reduced by that amount and I adjusted the amount I initially took out to take account of this.

I can see online that this letter has been received but not actioned yet.

I do not know why this would lead to M1 though.