First self assessment

eastcorkram

Not so much about cutting tax, but seemed the right place to post it.

I'm going to stop work at the end of this calendar year, aged 65. 
Once state pension starts, I believe I'll have to do self assessment, as there'll also be pension from abroad, paid untaxed.

I've never done SA before. Trying to figure out how it works. 

Supposing that's all I had, and it totalled £20k a year, I assume I inform HMRC about the figure, and they tell me how much tax I have to pay them. 

But, there will also be a DB scheme in payment. Does that still get given a tax code as normal?

Also, there are 2 SIPPs. I'm not sure what I'll do with those, but most likely would draw down say £5k per year. So does that get a tax code too? 

If the DB and DC things are given tax codes, do I still tell HMRC how much I've taken? As in, with the DC, maybe there'll be a year I take nothing, then more than £5k the following year. Or would it make it more straightforward to take the same amount every year, whether I need to or not? 

eskbanker

PAYE tax codings will be created for any UK company paying you in a given tax year, and will be based on assumptions made by HMRC from the dates and amounts concerned - you can use your online personal tax account to notify them of expected amounts across the tax year, which should allow the codes to be set up from realistic values, but I believe this can only be done once each has started to pay, so the initial deductions won't be very accurate.

It'll all come out in the wash, but will probably take a few iterations to get to the point where deductions result in the correct amount of tax being taken at the point of payment, especially if you wish to retain flexibility of drawdowns from multiple sources!

Dazed_and_C0nfused

eastcorkram said:

Not so much about cutting tax, but seemed the right place to post it.

I'm going to stop work at the end of this calendar year, aged 65. 
Once state pension starts, I believe I'll have to do self assessment, as there'll also be pension from abroad, paid untaxed.

I've never done SA before. Trying to figure out how it works. 

Supposing that's all I had, and it totalled £20k a year, I assume I inform HMRC about the figure, and they tell me how much tax I have to pay them. 

But, there will also be a DB scheme in payment. Does that still get given a tax code as normal?

Also, there are 2 SIPPs. I'm not sure what I'll do with those, but most likely would draw down say £5k per year. So does that get a tax code too? 

If the DB and DC things are given tax codes, do I still tell HMRC how much I've taken? As in, with the DC, maybe there'll be a year I take nothing, then more than £5k the following year. Or would it make it more straightforward to take the same amount every year, whether I need to or not? 

A Self Assessment return is to declare all taxable income.

So you would declare any employment or pension income, whether it be the DB pension or (taxable) income taken from a SIPP.

A tax code is just a method of collecting some tax during the year, ideally minimising the amount left to pay from your Self Assessment return.

When you compete the return you would also declare any tax deducted at source by the pension payers.

So your SA302 calculation might show a liability of say £3,500 but then give credit for the PAYE tax leaving just £1,000 to pay direct to HMRC.

When you complete your return taken careful note of two questions near the end of the return relating to collection of any tax owed.  These often seem to be ignored and as a result HMRC's subsequent actions cause confusion (going off the frequent posts about it on here!).

One question is about how how you want to pay any tax owed from your Self Assessment.  If you file by 30 December and owe less than £3,000 then having the tax collected via your tax code is an option.  For example if you file a 2024-25 return before 30 December 2025 you can (subject to one or two rules HMRC have) have the tax included in the 2026-27 tax code 

The second question relates to keeping your current tax code up to date (2025-26 in the example above) and is nothing whatsoever to do with tax owed from the 2024-25 tax return you are completing.  In your situation it might mean HMRC include the foreign pensions in your tax code to collect tax sooner leaving less to pay tax under Self Assessment.

So think about the consequences before answering those two questions.  The people posting on here tend to be those who didn't want their tax code messing with but didn't bother to answer those questions to reflect that.