Question re tax code

Donewithwork1

I retired from work in June last year with a K80X tax code and have had no other taxable income since.  Self assessment was completed and I ended up owing HMRC £330.00 which I paid off in early January.

I plan to start drawing down from my DC pension in the new tax year and hoping that I will have a full 1257L code by then, but just wondering how I can confirm what my tax code will be for 2024/25.  Checking my tax code on the HMRC app today, it still says K80X !!

eskbanker

Donewithwork1 said:

I retired from work in June last year with a K80X tax code and have had no other taxable income since.  Self assessment was completed and I ended up owing HMRC £330.00 which I paid off in early January.

Just to be clear, the self-assessment would have been for 2022/23, so the fact that you stopped working during 2023/24 won't have been factored into that process.

Donewithwork1 said:

I plan to start drawing down from my DC pension in the new tax year and hoping that I will have a full 1257L code by then, but just wondering how I can confirm what my tax code will be for 2024/25.  Checking my tax code on the HMRC app today, it still says K80X !!

That code will presumably relate specifically to 23/24 - is there anything there for 24/25 yet, i.e. not just a code but also expected income from any sources?  If they're unaware of your retirement, i.e. haven't been notified of it by your ex-employer, then you may need to update the relevant details within your personal tax account....

Donewithwork1

eskbanker said:

Donewithwork1 said:

I retired from work in June last year with a K80X tax code and have had no other taxable income since.  Self assessment was completed and I ended up owing HMRC £330.00 which I paid off in early January.

Just to be clear, the self-assessment would have been for 2022/23, so the fact that you stopped working during 2023/24 won't have been factored into that process.

Donewithwork1 said:

I plan to start drawing down from my DC pension in the new tax year and hoping that I will have a full 1257L code by then, but just wondering how I can confirm what my tax code will be for 2024/25.  Checking my tax code on the HMRC app today, it still says K80X !!

That code will presumably relate specifically to 23/24 - is there anything there for 24/25 yet, i.e. not just a code but also expected income from any sources?  If they're unaware of your retirement, i.e. haven't been notified of it by your ex-employer, then you may need to update the relevant details within your personal tax account....

Thanks.  Yes the SA would have been for 22/23.  No nothing there for 24/25. 

On top of my relatively high monthly salary I also got a six figure bonus at end of April last year and as a consequence got caned for tax as a result.  I managed to obtain a full tax refund after a few months after I confirmed and told HMRC that I was retired and would not have any further income in 2023/24.

I'm hoping to be able to arrange a monthly drawdown from my SIPP provider from next month of a monthly equivalent of 12570 + 4190 (25% tax free amount) annually so need to clarify this in advance.

Dazed_and_C0nfused

Donewithwork1 said:

eskbanker said:

Donewithwork1 said:

I retired from work in June last year with a K80X tax code and have had no other taxable income since.  Self assessment was completed and I ended up owing HMRC £330.00 which I paid off in early January.

Just to be clear, the self-assessment would have been for 2022/23, so the fact that you stopped working during 2023/24 won't have been factored into that process.

Donewithwork1 said:

I plan to start drawing down from my DC pension in the new tax year and hoping that I will have a full 1257L code by then, but just wondering how I can confirm what my tax code will be for 2024/25.  Checking my tax code on the HMRC app today, it still says K80X !!

That code will presumably relate specifically to 23/24 - is there anything there for 24/25 yet, i.e. not just a code but also expected income from any sources?  If they're unaware of your retirement, i.e. haven't been notified of it by your ex-employer, then you may need to update the relevant details within your personal tax account....

Thanks.  Yes the SA would have been for 22/23.  No nothing there for 24/25. 

On top of my relatively high monthly salary I also got a six figure bonus at end of April last year and as a consequence got caned for tax as a result.  I managed to obtain a full tax refund after a few months after I confirmed and told HMRC that I was retired and would not have any further income in 2023/24.

I'm hoping to be able to arrange a monthly drawdown from my SIPP provider from next month of a monthly equivalent of 12570 + 4190 (25% tax free amount) annually so need to clarify this in advance.

The emergency tax code (1257L) will be used on the first payment and HMRC will review this once they are notified of the first payment being made.

You cannot do anything in advance to change that.

eskbanker

I could be wrong but believe that HMRC don't start dishing out tax codes to new pension providers until the first payment is made, so think that you need to let that happen and then get the coding adjusted if necessary to reflect what your expected income will be.

Donewithwork1

Ok thanks both.  I think I'll wait and see.

Scot_39

Tax office will frequently "issue" pension companies with a 1257L / M1 tax code - for initial payment purposes.

See

https://www.gov.uk/tax-codes/emergency-tax-codes

Note the bit about emergency tax code will last until end of tax year.

I am not sure if that is always true.

But it has implications if taking irregular income - or like me - only taking an income late in tax year.