Pension income crept into higher rate tax

squirrelpie

As @QrizB said, it's probably untaxed interest I've got a K-tax code this year

SVaz

Are your diamond shoes too tight as well 😉

Stubod

..must be terrible to earn that much that you have to pay tax as well.....

hugheskevi

Stubod said:

..must be terrible to earn that much that you have to pay tax as well.....

It is pension income, not earnings.

The income tax payable on £50,270 is £7,538.20 with no National Insurance to pay (15% average tax rate).

If it were earnings, the income tax and employee NI combined would be £10,554.20 (21% average tax rate, ignoring employer National Insurance contributions).

Factor in employer National Insurance contributions due on the earnings, and the combined tax would be £16,235.66 (32% average tax rate).

It really is no surprise that people want to retire early

Flugelhorn

squirrelpie said:

As @QrizB said, it's probably untaxed interest I've got a K-tax code this year

I always pour another glass of wine when trying to understand the K code - thankfully HMRC gave up sending me wine ... I mean K codes... and stuck to SA 

Oldmoondog

Further it my recent thread on higher tax rate, my latest tax code notice states for the first time in 16 years since retiring that I have a sum listed under Adjustment to Rate Bands when nothing has changed on my income.

SarahB16

Oldmoondog said:

Further it my recent thread on higher tax rate, my latest tax code notice states for the first time in 16 years since retiring that I have a sum listed under Adjustment to Rate Bands when nothing has changed on my income.

Could it be due to your savings income exceeding the threshold of £500 (20% tax payer) or £1,000 (40% tax payer). 

Dazed_and_C0nfused

Oldmoondog said:

Further it my recent thread on higher tax rate, my latest tax code notice states for the first time in 16 years since retiring that I have a sum listed under Adjustment to Rate Bands when nothing has changed on my income.

In your previous thread you referred to military and State Pensions.

Are you saying you have been excluded from the inflation related increases everyone else receiving these pensions is getting from April 2025?

State Pension is going up 4.1% for most people and military could be 1.7%.

With the Personal Allowance and rate bands remaining the same as previous years that could mean you are higher rate overall but not on your main source of income. 

If you have two (or more) pensions paid under PAYE that is where an adjustment to rate band comes into play.  Your second pension stays on BR (basic rate) code and you pay more at your main pension to compensate for this.

bjorn_toby_wilde

SarahB16 said:

Oldmoondog said:

Further it my recent thread on higher tax rate, my latest tax code notice states for the first time in 16 years since retiring that I have a sum listed under Adjustment to Rate Bands when nothing has changed on my income.

Could it be due to your savings income exceeding the threshold of £500 (20% tax payer) or £1,000 (40% tax payer). 

I think that’s the wrong way round Sarah. 

badmemory

Flugelhorn said:

squirrelpie said:

As @QrizB said, it's probably untaxed interest I've got a K-tax code this year

I always pour another glass of wine when trying to understand the K code - thankfully HMRC gave up sending me wine ... I mean K codes... and stuck to SA 

Sorry but you can no longer just refer to it as SA.  I assume you are referring to self assessment, which I used to do.  Many pensioners now are under SA which is simple assessment along with the K code, in my case anyway.  Calling both SA seems to show a distinct lack of common sense and/or imagination.  I would prefer to file self assessment but they have told me if I do they will just ignore it anyway.  

The one advantage of my SA is that when they are 6 months late notifying me (so Jan 25 instead of July 24) then I still get 3 months to pay so paid mid april instead of Jan.  Almost 3 months extra interest for me.