Paying Tax on my BT Pension - why ?

Shaky1105

Hi all. I've started drawing my BT pension and I'm getting taxed on it but I don't know why ?

The pension amount is only just over £400 pm, I've decided to call it a day and not bother looking for any more work and I get roughly £50 pm in interest from savings I have. My missus is claiming her full new state pension of £221.20 pw and we can live on what we receive.

My pension is getting taxed on a 1 month basis (BR X) and the tax is just over £80 pm. I haven't done any work at all this tax year but was claiming contributions based JSA until the start date of my pension at the end of May.

I can't help but feel that HMRC have got this completely wrong (unless pensions are calculated differently ?) so I just wondered if I should be contacting HMRC or is it one of these situations that needs time to sort itself out ?

TIA - Shaky

Dazed_and_C0nfused

Shaky1105 said:

Hi all. I've started drawing my BT pension and I'm getting taxed on it but I don't know why ?

The pension amount is only just over £400 pm, I've decided to call it a day and not bother looking for any more work and I get roughly £50 pm in interest from savings I have. My missus is claiming her full new state pension of £221.20 pw and we can live on what we receive.

My pension is getting taxed on a 1 month basis (BR X) and the tax is just over £80 pm. I haven't done any work at all this tax year but was claiming contributions based JSA until the start date of my pension at the end of May.

I can't help but feel that HMRC have got this completely wrong (unless pensions are calculated differently ?) so I just wondered if I should be contacting HMRC or is it one of these situations that needs time to sort itself out ?

TIA - Shaky

The tax code used when a pension starts is determined by the pension payer, BT, albeit using guidance published by HMRC.

Based on what you have posted you should be able to contact HMRC and get an updated tax code issued which will allow BT to stop deducting tax and refund the tax already deducted when they first use the new tax code.

Having your P45 from DWP would be useful when you contact HMRC.

Remember that when your State Pension starts your total pension income will be sufficient that you will start to pay tax again sooner or later.

Marcon

Sounds as if you might not have a personal tax account? If not, setting one up could be useful: https://www.gov.uk/personal-tax-account

Shaky1105

Dazed_and_C0nfused said:

The tax code used when a pension starts is determined by the pension payer, BT, albeit using guidance published by HMRC.

Based on what you have posted you should be able to contact HMRC and get an updated tax code issued which will allow BT to stop deducting tax and refund the tax already deducted when they first use the new tax code.

Having your P45 from DWP would be useful when you contact HMRC.

Remember that when your State Pension starts your total pension income will be sufficient that you will start to pay tax again sooner or later.

Cheers for that, I'll get onto contacting them next week and see what they have to say.

Shaky1105

Marcon said:

Sounds as if you might not have a personal tax account? If not, setting one up could be useful: https://www.gov.uk/personal-tax-account

Thanks for the suggestion but I do have a PTA. I can't really see anything on there that would go to explaining why they are taking PAYE tax off me other than an estimated amount of earnings for the year, which seems to be taking into account they think I may be considering starting to work again, maybe that's why ? I'll see what they have to say when I contact them.

Albermarle

Shaky1105 said:

Marcon said:

Sounds as if you might not have a personal tax account? If not, setting one up could be useful: https://www.gov.uk/personal-tax-account

Thanks for the suggestion but I do have a PTA. I can't really see anything on there that would go to explaining why they are taking PAYE tax off me other than an estimated amount of earnings for the year, which seems to be taking into account they think I may be considering starting to work again, maybe that's why ? I'll see what they have to say when I contact them.

The wrong estimated income is almost certainly where the problem lies.

Hoenir

Shaky1105 said:

Marcon said:

Sounds as if you might not have a personal tax account? If not, setting one up could be useful: https://www.gov.uk/personal-tax-account

I can't really see anything on there that would go to explaining why they are taking PAYE tax off me other than an estimated amount of earnings for the year, which seems to be taking into account they think I may be considering starting to work again, maybe that's why ? 

The pension provider has to operate an emergency tax code as you've no P45 .  Now the HMRC are aware of your receiving a taxable income they'll notify your pension provider of your tax code for the 24/25 year.  In principle it's no different to getting paid at work for a new job. Pensions are processed through a payroll system. 

eastcorkram

Is it down to me to inform HMRC if not working? I presume if I stop work next week and had no intention of doing paid employment again, the only way they'll know that is if I tell them. 

molerat

eastcorkram said:

Is it down to me to inform HMRC if not working? I presume if I stop work next week and had no intention of doing paid employment again, the only way they'll know that is if I tell them. 

If you don't intend working again then yes as they won't do anything about your codes, if necessary, without hard information.