Personal tax increase - confused?

suze5

Hi, I have had notification of a change of tax code from 98L to 50L (from April 2025) on my main private pension and been advised that I will pay about £103 more next year.  (Two small ones have not changed BR). I am 68, retired and my personal circumstances are unchanged. Does anyone know why this has happened. Excuse my ignorance, don’t understand tax 🫣…thanks.

Dazed_and_C0nfused

suze5 said:

Hi, I have had notification of a change of tax code from 98L to 50L (from April 2025) on my main private pension and been advised that I will pay about £103 more next year.  (Two small ones have not changed BR). I am 68, retired and my personal circumstances are unchanged. Does anyone know why this has happened. Excuse my ignorance, don’t understand tax 🫣…thanks.

Is your State Pension not increasing from April?

DWP always pay that without any tax being deducted so, where necessary, you pay the tax via your other pensions.

zagfles

Almost certainly because the state pension is going up but the personal tax allowance has been frozen. So because you're getting more state pension it uses up more of your personal allowance, so there's less left for the private pension. 

SVaz

Have you got untaxed savings interest,  that can muck up your tax code.
Set up a Gov . Uk account and you will be able to see what’s going on

suze5

Thanks so much everyone, seems its the state pension increase then…didn’t realise SP was taxed ☺️
(SVaz ..no untaxed savings interest, but thanks).

molerat

suze5 said:

Thanks so much everyone, seems its the state pension increase then…didn’t realise SP was taxed ☺️
(SVaz ..no untaxed savings interest, but thanks).

The SP is not taxed directly but is taxable income.  So to bring it into the PAYE system they deduct the amount of state pension from your tax allowance.  If you did not have another taxable income source and your state pension was above your allowance, the new full pension will be for the 27/28 tax year, they would send you a simple assessment aka a bill.

cutestkids

suze5 said:

Thanks so much everyone, seems its the state pension increase then…didn’t realise SP was taxed ☺️
(SVaz ..no untaxed savings interest, but thanks).

All income is subject to tax. State pension now uses the majority of your personal allowance so any private or workplace pensions will be taxed once they tip you over PA.