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Help with Tax Code

BIGEYE
Posts: 192 Forumite


I am still in full time employment and have reached state pension age. I am due to receive my first state pension payment in a couple of weeks. I've just received this notification of a new tax code from HMRC of a new tax code. For the life of me, I can't get my head around it, and it just doesn't seem right. Can anyone have a look and explain in laymans terms what this means and is it correct.

This is from 06/04/23 to 05/04/23. My only income is salary, and will be state pension.
TIA

This is from 06/04/23 to 05/04/23. My only income is salary, and will be state pension.
TIA
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Comments
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Why doesn't it seem right? The State Pension is taxable, just the same as the rest of your income. The tax code means that the tax due will be collected from your full time employment.#2 Saving for Christmas 2024 - £1 a day challenge. £325 of £3660
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Ahhh... I see what you mean - you're not going to be receiving £10,862 before 6 April. What tax code are they applying?#2 Saving for Christmas 2024 - £1 a day challenge. £325 of £3661
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To me it reads that the state pension is coming out my personal allowance. I would have thought that Taxable amount to be paid = (Salary + State Pension) - Personal Allowance. Whatever is left is taxable.
For example, Salary = £50k pa, State Pension = £10k, PA = £12.57k
50 + 10 - 12.57 = £47.43k is the amount subject to tax.0 -
BIGEYE said:To me it reads that the state pension is coming out my personal allowance. I would have thought that Taxable amount to be paid = (Salary + State Pension) - Personal Allowance. Whatever is left is taxable.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
"Never retract, never explain, never apologise; get things done and let them howl.” Nellie McClung
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So the problem is that for that tax year you won't actually get that much state pension?1200 bonus saver
200 regular saver
35 NS&I
88 credit union0 -
In the first tax year of receiving State Pension your tax code is usually reduced by the full annual amount of SP.
And will be operated on a non-cumulative basis for the remainder of the current tax year i.e. your employer will not take into account what you have earned earlier in the year they will just look at your earnings each week/month going forward and use new tax code against those endings.
Perfectly normal.0 -
Ef79 said:So the problem is that for that tax year you won't actually get that much state pension?0
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So from the new tax year, April 2024, then Taxable amount to be paid = (Salary + State Pension) - Personal Allowance. The result is the is taxable amount, at the appropriate tax rate(s).0
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What exactly is the code being allocated ? 170LX ? If so you will be taxed on 1/12th of that pension amount each month which is what you will be receiving. Any discrepancy will be picked up next year when the year is reviewed.From April 2024 your code will be 12570 - the new annual SP amount. The main difference would be the X suffix being dropped so cumulative tax is applied.For example, Salary = £50k pa, State Pension = £10k, PA = £12.57k
50 + 10 - 12.57 = £47.43k is the amount subject to tax.But the way it is worked through the tax code is £50K - (£12.57K - £10K) = £47.43K taxed.
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