Wife's state pension and tax allowance

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This discussion was created from comments split from: State pension questions...

art123_2

Hello 

I am hoping someone is able to help me please. 

My wife retired recently at the end of 23/24 but doesn't receive her state pension until August.  I estimate that she should receive roughly £7300 in this tax year along with a small pension of £3600, a total income of £10900.  Her allowance for tax free savings interest in 24/25 should be £18570 - £10900 = £7670.  However, as HMRC treat her as having received £11502 in the first year,  will this affect her tax free savings amount.

Will she still be entitled to receive £7670 tax free on her savings, or will her starter rate figure be affected by HMRC using £11502.    £18570 - £11502 - £3600  would reduce her savings allowance to £3468.

I'd be grateful if someone could please clarify this for me.

Thanks in advance.

molerat

You are confusing the tax code, which is purely a method of trying to collect the correct amount of tax in the year, with her allowances.  HMRC may deduct the full annual amount of pension from the tax allowance and apply it on an M1 basis but that will not affect how much interest she will be able to earn tax free.