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My Latest P55 Claim Issues
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Neversurrender
Posts: 103 Forumite

Hi
Recently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.
I always make sure I stay below my tax threshold, to avoid paying Tax.
My drawdown, together with my other private pension, is total of £13,500
My allowance is £12,570 + Married allowance of £,1260 = £13,830
So you can see I've stayed below my personal threshold.
Now here's the reason I am posting.
On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.
I was able to state £963
So here's the bit I can't get my head around.
HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894
This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.
So why did they take it off my taxable income?
So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.
Any advice much appreciated
Thanks
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Comments
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You have a misunderstanding of how married allowance works. It is not an additional allowance which is added to your normal personal allowance when it comes to calculating your tax liability - it is a tax credit worth up to £252.However, for tax code purposes ONLY £1260 is added to obtain this relief (£1260 at 20% is £252.)
Calculate your tax liability using your normal personal allowance and deduct £252 from the result.1 -
Nomunnofun1 said:You have a misunderstanding of how married allowance works. It is not an additional allowance which is added to your normal personal allowance when it comes to calculating your tax liability - it is a tax credit worth up to £252.However, for tax code purposes ONLY £1260 is added to obtain this relief (£1260 at 20% is £252.)
Calculate your tax liability using your normal personal allowance and deduct £252 from the result.Thanks but the married allowance is a side issueEven if we were to assume I didn't have the married allowance, the situation would be no different, would it?The whole crux of my question isWhy did they take my taxable interest of my basic allowance, which has now reduced it, this cant be right if I have £1000 plus £5000 as an allowance for taxable savings interest.I only mentioned married allowance for full disclosure
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What exactly have you received - I suspect a coding notice which will have no bearing on the tax calculation that you will receive as a result of sending the P55.1
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Neversurrender said:HiRecently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.I always make sure I stay below my tax threshold, to avoid paying Tax.My drawdown, together with my other private pension, is total of £13,500My allowance is £12,570 + Married allowance of £,1260 = £13,830So you can see I've stayed below my personal threshold.Now here's the reason I am posting.On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.I was able to state £963So here's the bit I can't get my head around.HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.So why did they take it off my taxable income?So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.Any advice much appreciatedThanks
Who is going to use this tax code if you aren't taking more money out of the pension in this tax year?
Also, you cannot have a Personal Allowance greater than £12,570. Marriage Allowance entitles you to a tax reduction, not extra Personal Allowance.1 -
Dazed_and_C0nfused said:Neversurrender said:HiRecently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.I always make sure I stay below my tax threshold, to avoid paying Tax.My drawdown, together with my other private pension, is total of £13,500My allowance is £12,570 + Married allowance of £,1260 = £13,830So you can see I've stayed below my personal threshold.Now here's the reason I am posting.On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.I was able to state £963So here's the bit I can't get my head around.HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.So why did they take it off my taxable income?So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.Any advice much appreciatedThanks
Who is going to use this tax code if you aren't taking more money out of the pension in this tax year?
Also, you cannot have a Personal Allowance greater than £12,570. Marriage Allowance entitles you to a tax reduction, not extra Personal Allowance.What I can't understand is why are they knocking the savings interest off my personal allowance in the first place, regardless of if I get married allowance or not I still have at least £5000 as an additional allowance for that savings interestSo who knows maybe I would look for more income in this tax year, then what would I do??HMRC have stuck my savings interest onto my normal allowance meaning I will be put into tax earlier0 -
Neversurrender said:Dazed_and_C0nfused said:Neversurrender said:HiRecently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.I always make sure I stay below my tax threshold, to avoid paying Tax.My drawdown, together with my other private pension, is total of £13,500My allowance is £12,570 + Married allowance of £,1260 = £13,830So you can see I've stayed below my personal threshold.Now here's the reason I am posting.On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.I was able to state £963So here's the bit I can't get my head around.HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.So why did they take it off my taxable income?So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.Any advice much appreciatedThanks
Who is going to use this tax code if you aren't taking more money out of the pension in this tax year?
Also, you cannot have a Personal Allowance greater than £12,570. Marriage Allowance entitles you to a tax reduction, not extra Personal Allowance.In January I qualify for state pensionSo will have 3 months payments in this tax year, estimated to total £2,853So added to my current pensions the allowance now reduced to £12,894 won't be enoughWhat I can't understand is why are they knocking the savings interest off my personal allowance in the first place, regardless of if I get married allowance or not I still have at least £5000 as an additional allowance for that savings interest
They won't know/care/consider if you are expected to get your State Pension in January 2026. You can defer your State Pension so just because you actually reach State Pension age doesn't mean you will choose to put it into payment.
Also, you are not taxed on the State Pension payments you receive. It's your entitlement which counts, not what you paid in each tax year.
You refer to "current pensions". Maybe you could clarify how many pensions you are actively taking money from and when the next payment is due?
Remember you can only use the savings starter rate band once you have used all your Personal Allowance. And you can only use the savings nil rate band once you have used any savings starter rate band that is available. At the moment I suspect HMRC are estimating you have some spare Personal Allowance that the interest will use.1 -
Is the P55 for the current tax year 25/26?
If so then I'm not sure why you are concerned about the current tax code as once the P55 is processed you will have no tax free allowance left and an updated code will be issue.1 -
Dazed_and_C0nfused said:Neversurrender said:Dazed_and_C0nfused said:Neversurrender said:HiRecently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.I always make sure I stay below my tax threshold, to avoid paying Tax.My drawdown, together with my other private pension, is total of £13,500My allowance is £12,570 + Married allowance of £,1260 = £13,830So you can see I've stayed below my personal threshold.Now here's the reason I am posting.On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.I was able to state £963So here's the bit I can't get my head around.HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.So why did they take it off my taxable income?So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.Any advice much appreciatedThanks
Who is going to use this tax code if you aren't taking more money out of the pension in this tax year?
Also, you cannot have a Personal Allowance greater than £12,570. Marriage Allowance entitles you to a tax reduction, not extra Personal Allowance.In January I qualify for state pensionSo will have 3 months payments in this tax year, estimated to total £2,853So added to my current pensions the allowance now reduced to £12,894 won't be enoughWhat I can't understand is why are they knocking the savings interest off my personal allowance in the first place, regardless of if I get married allowance or not I still have at least £5000 as an additional allowance for that savings interest
They won't know/care/consider if you are expected to get your State Pension in January 2026. You can defer your State Pension so just because you actually reach State Pension age doesn't mean you will choose to put it into payment.
Also, you are not taxed on the State Pension payments you receive. It's your entitlement which counts, not what you paid in each tax year.
You refer to "current pensions". Maybe you could clarify how many pensions you are actively taking money from and when the next payment is due?
Remember you can only use the savings starter rate band once you have used all your Personal Allowance. And you can only use the savings nil rate band once you have used any savings starter rate band that is available. At the moment I suspect HMRC are estimating you have some spare Personal Allowance that the interest will use.OK thanks,Maybe I have misunderstood, I guess that's why I'm posting :-)Sorry made slight error before. I forgot I had already included my state pension in the original post, so here's the individual figuresHere's the income expected this tax year.7th April one off lump sum taxable drawdown £7,325.65Ongoing annual DB Pension £3,336And that state pension I will be taking from next January 2026Jan to March £2,842 ( I get what you said earlier but nevertheless here it is)So with reference to your last reply,Are you saying if state pension puts me above tax threshold I won't pay tax on that state pension?
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Using those figures your tax will be:
Income £13503 less personal allowance 12570 - £933
Tax at 20% - £186.60
less marriage allowance -£186.60
Tax due NIL
The state pension is taxable but will not suffer tax at source as there is no mechanism so to do. Instead tax will increase at your other sources to cover.
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Neversurrender said:Dazed_and_C0nfused said:Neversurrender said:Dazed_and_C0nfused said:Neversurrender said:HiRecently I completed a P55 as I do at this time every year, in order to claim back the overpaid tax taken when I flexibly drawdown from my private Sipp pension as a lump sum.I always make sure I stay below my tax threshold, to avoid paying Tax.My drawdown, together with my other private pension, is total of £13,500My allowance is £12,570 + Married allowance of £,1260 = £13,830So you can see I've stayed below my personal threshold.Now here's the reason I am posting.On completing the P55 it asked for a total of untaxed savings interest, so of course an assumption has to be made of what you expect to earn over this current tax year, in taxable interest.I was able to state £963So here's the bit I can't get my head around.HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,894This cant be right because I have my £1000 + £5000 minus my married allowance of £1,260 making £4,740 for interest I can earn on savings before paying Tax.So why did they take it off my taxable income?So what if I wanted to receive further income in this tax year, I would have to pay more tax because my untaxed savings interest has chewed up some of my tax allowance.Any advice much appreciatedThanks
Who is going to use this tax code if you aren't taking more money out of the pension in this tax year?
Also, you cannot have a Personal Allowance greater than £12,570. Marriage Allowance entitles you to a tax reduction, not extra Personal Allowance.In January I qualify for state pensionSo will have 3 months payments in this tax year, estimated to total £2,853So added to my current pensions the allowance now reduced to £12,894 won't be enoughWhat I can't understand is why are they knocking the savings interest off my personal allowance in the first place, regardless of if I get married allowance or not I still have at least £5000 as an additional allowance for that savings interest
They won't know/care/consider if you are expected to get your State Pension in January 2026. You can defer your State Pension so just because you actually reach State Pension age doesn't mean you will choose to put it into payment.
Also, you are not taxed on the State Pension payments you receive. It's your entitlement which counts, not what you paid in each tax year.
You refer to "current pensions". Maybe you could clarify how many pensions you are actively taking money from and when the next payment is due?
Remember you can only use the savings starter rate band once you have used all your Personal Allowance. And you can only use the savings nil rate band once you have used any savings starter rate band that is available. At the moment I suspect HMRC are estimating you have some spare Personal Allowance that the interest will use.OK thanks,Maybe I have misunderstood, I guess that's why I'm posting :-)Sorry made slight error before. I forgot I had already included my state pension in the original post, so here's the individual figuresHere's the income expected this tax year.7th April one off lump sum taxable drawdown £7,325.65Ongoing annual DB Pension £3,336And that state pension I will be taking from next January 2026Jan to March £2,842 ( I get what you said earlier but nevertheless here it is)So with reference to your last reply,Are you saying if state pension puts me above tax threshold I won't pay tax on that state pension?
DWP do not deduct tax from State Pension payments. From the start of the 2026-27 tax year you are going to be paying tax on the DB pension as your tax code is likely to be smaller than that pension. The DB pension payer will deduct tax.
HMRC have deducted £963 from my total personal allowance of £13,830 and left me with an allowance of £12,8941
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