Incorrect tax code on NHS pension

aroominyork

My wife’s income is state pension and NHS pension. She left her last job - it was not NHS - in summer 2024 (although she subsequently took on one day a month’s consultancy which she will declare on self-assessment). Gateway shows her FY26 tax code as changing from BR to D0 for her NHS pension and also shows c.£62k projected income from the job she left last year (it shows c.£21k income for FY25, representing her last few months there). Only the NHS pension has an option to “Update estimated income”. How should she get this remedied; does it need a pen and paper letter to HMRC?

Nomunnofun1

aroominyork said:

My wife’s income is state pension and NHS pension. She left her last job - it was not NHS - in summer 2024 (although she subsequently took on one day a month’s consultancy which she will declare on self-assessment). Gateway shows her FY26 tax code as changing from BR to D0 for her NHS pension and also shows c.£62k projected income from the job she left last year (it shows c.£21k income for FY25, representing her last few months there). Only the NHS pension has an option to “Update estimated income”. How should she get this remedied; does it need a pen and paper letter to HMRC?

You can click on the employment and indicate somewhere that that source of income has ceased by entering a leaving date! 

aroominyork

Nomunnofun1 said:

aroominyork said:

My wife’s income is state pension and NHS pension. She left her last job - it was not NHS - in summer 2024 (although she subsequently took on one day a month’s consultancy which she will declare on self-assessment). Gateway shows her FY26 tax code as changing from BR to D0 for her NHS pension and also shows c.£62k projected income from the job she left last year (it shows c.£21k income for FY25, representing her last few months there). Only the NHS pension has an option to “Update estimated income”. How should she get this remedied; does it need a pen and paper letter to HMRC?

You can click on the employment and indicate somewhere that that source of income has ceased by entering a leaving date! 

Curiously, it says "This employer told us how much you were paid up to 21 May 2024 when your employment with them ended." Yet HMRC has estimated a salary for next tax year...!

Dazed_and_C0nfused

aroominyork said:

Nomunnofun1 said:

aroominyork said:

My wife’s income is state pension and NHS pension. She left her last job - it was not NHS - in summer 2024 (although she subsequently took on one day a month’s consultancy which she will declare on self-assessment). Gateway shows her FY26 tax code as changing from BR to D0 for her NHS pension and also shows c.£62k projected income from the job she left last year (it shows c.£21k income for FY25, representing her last few months there). Only the NHS pension has an option to “Update estimated income”. How should she get this remedied; does it need a pen and paper letter to HMRC?

You can click on the employment and indicate somewhere that that source of income has ceased by entering a leaving date! 

Curiously, it says "This employer told us how much you were paid up to 21 May 2024 when your employment with them ended." Yet HMRC has estimated a salary for next tax year...!

That will be because the NHS employment is still as her "main" employment by HMRC's system.

She needs to call (8am sharp is best by all accounts) and ask them to make the NHS pension her main source of PAYE income and calculate a new tax code for 2025-26.

An update might also be worth looking at for 2024-25 depending on what code the NHS are currently using.

aroominyork

Thanks. It's curious though... when she left her job last May (it was not in the NHS; the NHS pension relates to her work ten years ago) her Gateway record showed and still shows her leaving date, and the code for her NHS pension changed from D0 to BR. They are now reinstating it to D0 and reinstating her in her last job!

I have a second question please. In November she started a £500 per month self-employed advisory role, so she will earn £2500 in this FY. Can the trading allowance be used so she only pays tax on £1500 of this? And if the answer is Yes, does that mean that she can only add £1200 net/£1500 gross to her SIPP, rather than £2000 net/£2500 gross?

Dazed_and_C0nfused

aroominyork said:

Thanks. It's curious though... when she left her job last May (it was not in the NHS; the NHS pension relates to her work ten years ago) her Gateway record showed and still shows her leaving date, and the code for her NHS pension changed from D0 to BR. They are now reinstating it to D0 and reinstating her in her last job!

I have a second question please. In November she started a £500 per month self-employed advisory role, so she will earn £2500 in this FY. Can the trading allowance be used so she only pays tax on £1500 of this? And if the answer is Yes, does that mean that she can only add £1200 net/£1500 gross to her SIPP, rather than £2000 net/£2500 gross?

I don't know why you think they are reinstating it if it shows as having ended last May?

Providing she meets the rules to be able to claim the trading allowance then yes her pensionable income from self employment would be £1,500 if that was what her profit was.

But what about her earnings from April and May (of the same tax year)? 

aroominyork

I say they are reinstating it because, for FY26, Gateway shows estimated £62k of income from the organisation she left last May. They seem to be using that to return her to D0. 

She has already made pension contributions for April and May. 

molerat

My SIL still has a tax code allocated to a job she left in 2020 with an estimated income and estimated tax deducted. HMRC have indicated she no longer has that employment as commented above.  Each year they do the same and each year the summary shows no PAYE income for that year.  As she now has no PAYE income sources it does not cause a problem but HMRC do seem to do some strange things.

Dazed_and_C0nfused

molerat said:

My SIL still has a tax code allocated to a job she left in 2020 with an estimated income and estimated tax deducted. HMRC have indicated she no longer has that employment as commented above.  Each year they do the same and each year the summary shows no PAYE income for that year.  As she now has no PAYE income sources it does not cause a problem but HMRC do seem to do some strange things.

Just as @molerat says this is quite normal.  Just because a tax code has been calculated for next year doesn't mean an employment that has ended is being reinstated 

As previously explained you just need to get your wife to ask HMRC to make her NHS pension her main PAYE source now (referred to as Primary in the guidance below).

There is more information here in the Main Review section.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye13005