Help understanding a LGPS increase which has become a significant decrease

worlestone

I'll confess that I always have difficulty with numbers and understanding how tax works. However, despite an increase of 6.7% in my local government pension the monthly amount I receive has gone down by almost £100 a month.

I have two LGPS (Avon Pension) pensions and a Hargreave Lansdown SIPP in drawdown, throughout last year they paid:

Avon Pension A £498.30 per month

Avon Pension B £403.26 per month

HL SIPP             £923.00 per month

April they paid

Avon Pension A £427.18
Avon Pension B £427.55
HL SIPP             £1007.00 (increased drawdown to help against inflation)

My tax allowance for 2024/25 is the same as last year, £12570. Accoprding to the letter from HMRC codes for 2024/25 is

Avon Pension 491L

Avon Pension BR

HL SIPP 765T

I have tried the Avon Pension website which rather unhelpfully has a notice at the top saying they are aware that lots of people have enquires regarding tax changes...

 I have tried calling HMRC, but it's a 40 minute wait!

Can anyone shed any light on this please? Thank you

Sarahspangles

Are you also in receipt of State Pension and if so, how much?

Dazed_and_C0nfused

You need to post the gross (taxable) payments but it's likely to just be you are paying the tax slightly differently now, more on Avon A and less on HL SIPP.

worlestone

Thank you for the comments. I think I've found the answer, I had not checked the 2023/24 tax code notice, it seems that HMRC have decided to change around the tax free amounts on my pensions, so two now have a tax free element and one pension is at basic rate tax, hence why there's a huge chunk missing! Tax free amount is still the same £12,570 pa, frozen again, so effectively paying more tax and reducing my income. 

I'm glad there's an election coming, I'm feeling very angry about this.

LHW99

worlestone said:

Thank you for the comments. I think I've found the answer, I had not checked the 2023/24 tax code notice, it seems that HMRC have decided to change around the tax free amounts on my pensions, so two now have a tax free element and one pension is at basic rate tax, hence why there's a huge chunk missing! Tax free amount is still the same £12,570 pa, frozen again, so effectively paying more tax and reducing my income. 

I'm glad there's an election coming, I'm feeling very angry about this.

As long as the correct amount of tax is being paid, how will changing the Government help (even if it does in other areas)? It is unlikely in the current situation the country (world) is in that any party prospecting to be in Government next year will be reducing income tax levels / increasing allowances in a hurry, and there's probably more chance if the current lot manage to scrape in than if there's a change.

Lemon_dr1zzle

worlestone said:

Thank you for the comments. I think I've found the answer, I had not checked the 2023/24 tax code notice, it seems that HMRC have decided to change around the tax free amounts on my pensions, so two now have a tax free element and one pension is at basic rate tax, hence why there's a huge chunk missing! Tax free amount is still the same £12,570 pa, frozen again, so effectively paying more tax and reducing my income. 

I'm glad there's an election coming, I'm feeling very angry about this.

There isn’t anything ‘missing’. Your gross amounts have increased therefore your tax has increased. 

If you think your tax codes are wrong speak to HMRC 

xylophone

https://blogs.lse.ac.uk/politicsandpolicy/what-a-drag-the-impact-of-the-frozen-personal-allowance-on-those-with-lower-incomes/#:~:text=the tax burden.-,The effect of freezing the Personal Tax Allowance is to,per cent in 2027/28.

When do you become eligible for State Pension?

Have you checked your forecast?

https://www.gov.uk/check-state-pension

Nebulous2

You may not have been paid the full increase this month yet. My LGPS payslip told me I had something like 23 days at the new rate and 7 at the old rate. (I can't currently locate it.)  Next month I'll get the full increase. 

OldBeanz

Wife is 8 months into her LGPS pension and received this month's payment on the 1st but still does not have a payslip and has not been informed about her increase.

Silvertabby

OldBeanz said:

Wife is 8 months into her LGPS pension and received this month's payment on the 1st but still does not have a payslip and has not been informed about her increase.

It's all online now - pay information, payslips and P60s (if applicable).

When your wife retired, her pensions paperwork should have included information on setting up her account.  Or her payroll (not her LGPS) will be able to help.

Qyburn

worlestone said:

Thank you for the comments. I think I've found the answer, I had not checked the 2023/24 tax code notice, it seems that HMRC have decided to change around the tax free amounts on my pensions, so two now have a tax free element and one pension is at basic rate tax, hence why there's a huge chunk missing! Tax free amount is still the same £12,570 pa, frozen again, so effectively paying more tax and reducing my income. 

If you're receiving more than last year pre-tax then you should end up with more post tax. Most likely thing, assuming you were taxed correctly last year, is that HMRC hasn't allocated the odes correctly so you're not getting all of your allowance.

I expect the increase means their estimates are no longer correct. To correct this you need to update the figures on your online account.

For each of your three income sources, can you give the estimated annual figure, and the tax code used for 24/25?