Income tax not be taken from pension

gundo

Hello apologies but pensions etc. are all new to me. I just reduced my hours at work and have started receiving a small DB pension from a previous employer to help make up for the loss of income from my reduced hours. My understanding is that this pension should be taxed at Basic Rate (as my current salary will be taking up the tax allowance) but today I checked my bank and I've received the pension payment in full with no tax taken off it.

Who should I contact to get this fixed (assuming my understanding is correct)? HMRC? The DB pension provider (Civil Service pensions)?

DE_612183

Have you checked your personal tax account with HMRC - there you should see what the two tax codes are for each income.

Do you know what they are?

Dazed_and_C0nfused

gundo said:

Hello apologies but pensions etc. are all new to me. I just reduced my hours at work and have started receiving a small DB pension from a previous employer to help make up for the loss of income from my reduced hours. My understanding is that this pension should be taxed at Basic Rate (as my current salary will be taking up the tax allowance) but today I checked my bank and I've received the pension payment in full with no tax taken off it.

Who should I contact to get this fixed (assuming my understanding is correct)? HMRC? The DB pension provider (Civil Service pensions)?

The first payment usually has the emergency tax code (1257L) applied by the pension company.

So assuming your first payment is no more than £1,048 that will almost certainly be what's happened.

Then when they report your first pension payment to HMRC they will review your tax codes and should issue a basic rate (BR) code for the pension. 

This will likely be on a non-cumulative basis and you at some point you will end up with a bill from HMRC for any tax owing.  Often they are happy to collect it via your tax code, you don't have to pay it direct to HMRC.

gundo

DE_612183 said:

Have you checked your personal tax account with HMRC - there you should see what the two tax codes are for each income.

Do you know what they are?

Just logged in and checked and it says that my current employment tax code is 1257LX and my civil service pension tax code is BRX and that was allegedly from the 30th of January but I got a statement a couple of days ago which has 1257L on it and it appears from the credit to my bank account that no tax has been taken.

Seems the CS pension people didn't update it when HMRC did. HMRC are aware that I have two sources of income, presumably CS pension people reported it to HMRC (as they should).

I guess HMRC will need to modify my tax code again to recover the tax that didn't get paid.

gundo

Dazed_and_C0nfused said:

gundo said:

Hello apologies but pensions etc. are all new to me. I just reduced my hours at work and have started receiving a small DB pension from a previous employer to help make up for the loss of income from my reduced hours. My understanding is that this pension should be taxed at Basic Rate (as my current salary will be taking up the tax allowance) but today I checked my bank and I've received the pension payment in full with no tax taken off it.

Who should I contact to get this fixed (assuming my understanding is correct)? HMRC? The DB pension provider (Civil Service pensions)?

The first payment usually has the emergency tax code (1257L) applied by the pension company.

So assuming your first payment is no more than £1,048 that will almost certainly be what's happened.

Then when they report your first pension payment to HMRC they will review your tax codes and should issue a basic rate (BR) code for the pension. 

This will likely be on a non-cumulative basis and you at some point you will end up with a bill from HMRC for any tax owing.  Often they are happy to collect it via your tax code, you don't have to pay it direct to HMRC.

Yes this exactly what's happened. When I checked on the HMRC app, the HMRC are aware of both incomes and they'll no doubt recover that in due course.

molerat

CSP would have informed HMRC when they processed the payment ahead of actually paying it so correctly used the emergency code.  The unpaid tax will not be collected due to the X suffix treating each payment stand alone.  It would be best to contact HMRC to get the X suffixes removed, there is no need for them to be there. Does your on line tax account show the correct annual income for both sources - if not then setting that may trigger a code change.

gundo

molerat said:

CSP would have informed HMRC when they processed the payment ahead of actually paying it so used the emergency code.  The unpaid tax will not be collected due to the X suffix treating each payment stand alone.  It would be best to contact HMRC to get the X suffixes removed, there is no need for them to be there. Does your on line tax account show the correct annual income for both sources - if not then setting that may trigger a code change.

I think that I've been given the X code because my income has varied on a monthly basis recently because I'm also paying AVCs via Salary Sacrifice and my salary has changed (20% pay cut due to reduces my hours to 4 days a week instead of 5 days).

Albermarle

gundo said:

Dazed_and_C0nfused said:

gundo said:

Hello apologies but pensions etc. are all new to me. I just reduced my hours at work and have started receiving a small DB pension from a previous employer to help make up for the loss of income from my reduced hours. My understanding is that this pension should be taxed at Basic Rate (as my current salary will be taking up the tax allowance) but today I checked my bank and I've received the pension payment in full with no tax taken off it.

Who should I contact to get this fixed (assuming my understanding is correct)? HMRC? The DB pension provider (Civil Service pensions)?

The first payment usually has the emergency tax code (1257L) applied by the pension company.

So assuming your first payment is no more than £1,048 that will almost certainly be what's happened.

Then when they report your first pension payment to HMRC they will review your tax codes and should issue a basic rate (BR) code for the pension. 

This will likely be on a non-cumulative basis and you at some point you will end up with a bill from HMRC for any tax owing.  Often they are happy to collect it via your tax code, you don't have to pay it direct to HMRC.

Yes this exactly what's happened. When I checked on the HMRC app, the HMRC are aware of both incomes and they'll no doubt recover that in due course.

Your tax position for 24/25 will be reviewed automatically by HMRC later in 2025, and any small deficit will probably juts result in a change of tax code for 25/26 to collect it.

Triumph13

Fingers crossed that it works okay for your second payment. 

Apparently, even after they have changed your tax code for your pension, so that it shows properly in your personal tax account, there is a further button someone at HMRC has to press before that tax code actually gets pushed to the system that forwards it to your pension provider.   You wouldn't believe the back and forth I had to establish that and get my pension finally taxed properly.

sheramber

Your January pension payment was probably calculated before they received your new code number as it would be processed before 30th of the month. 

It should be operated for your February payment