Tax query

squirrelpie

Maybe if you answer the questions two people have asked, they'll be able to help you?

molerat

What does your on line tax account show for how your tax code is arrived at and if it is split ?

Are you sure your drawdown is all tax free - would be a very strange idea to take all tax free when not using your tax allowance.

Albermarle

Your pension is 25% tax free and 75% taxable.
If you take just the tax free cash first ( either all at once or in stages) then no tax to pay, until it runs out and then all the remainder is taxable.
Or you can take a mixture of tax free and taxable cash as you go along.
So it depends on exactly what method you are using to take money.
Any taxable income from the pension will be added to your employment income to work out your tax.
It is quite possible that the wrong tax is being taken, and/or no tax has been taken previously when it should have been.
Your IFA should be your first port of call before phoning HMRC as that might confuse matters at this stage.

johnnyren

molerat said:

What does your on line tax account show for how your tax code is arrived at and if it is split ?

Albermarle said:

Your pension is 25% tax free and 75% taxable.
If you take just the tax free cash first ( either all at once or in stages) then no tax to pay, until it runs out and then all the remainder is taxable.
Or you can take a mixture of tax free and taxable cash as you go along.
So it depends on exactly what method you are using to take money.
Any taxable income from the pension will be added to your employment income to work out your tax.
It is quite possible that the wrong tax is being taken, and/or no tax has been taken previously when it should have been.
Your IFA should be your first port of call before phoning HMRC as that might confuse matters at this stage.

My ifa gives me 1400 a month from my pension pot ,     This is from the tax free 25 % part ,      I was under the impression any earnings above that would be also tax free if under my personal allowance ,     

molerat

Your first port of call should be your on line tax account, what is that showing for your income streams and tax code make up ?  And as I said, taking only tax free money from a pension when you are not using all your allowance elsewhere would be a very silly option for your FA to suggest.

johnnyren

molerat said:

What does your on line tax account show for how your tax code is arrived at and if it is split ?

Are you sure your drawdown is all tax free - would be a very strange idea to take all tax free when not using your tax allowance.

My tax code changed from s1269l to s305l
 I’m really sorry but I don’t understand the second part ,      All I’ve done is get 1400 a month from my tax free drawdown ,      I took a small job on paying about 6000 a year ,     I haven’t paid any tax on it for 2 yrs till last week ,   I thought my drawdown amount didn’t affect my earning from the part time job ,    This is what’s concerning me 

johnnyren

molerat said:

Your first port of call should be your on line tax account, what is that showing for your income streams and tax code make up ?  And as I said, taking only tax free money from a pension when you are not using all your allowance elsewhere would be a very silly option for your FA to suggest.

Could you clarify what you mean about not using my allowance elsewhere please 

Dazed_and_C0nfused

johnnyren said:

molerat said:

Your first port of call should be your on line tax account, what is that showing for your income streams and tax code make up ?  And as I said, taking only tax free money from a pension when you are not using all your allowance elsewhere would be a very silly option for your FA to suggest.

Could you clarify what you mean about not using my allowance elsewhere please 

No one is 100% sure if you have got any taxable pension income or not.

Is the £1,400 you keep referring to,

A.  £1,400 TFLS (and therefore £0 pension)
B.  £350 TFLS and £1,050 taxable pension
C.  £1,400 taxable pension

DRS1

Is it possible the 1400 pm has drained the 25% tax free bit of your pension and it is now coming from the 75% taxable bit?

Maybe the tax code change is because you now also have a tax code for the pension payments?

Lowtrawler

johnnyren said:

 I’m really sorry but I don’t understand the second part ,      All I’ve done is get 1400 a month from my tax free drawdown ,      I took a small job on paying about 6000 a year ,     I haven’t paid any tax on it for 2 yrs till last week ,   I thought my drawdown amount didn’t affect my earning from the part time job ,    This is what’s concerning me 

As others have said, it would be very strange for your IFA to arrange that you receive pension payments entirely from your 25% tax free pot. You need to check whether that actually is the case or whether it is a mixture of tax free and taxable that you are receiving. You can either contact your IFA to check or login to your personal tax account and see what taxable income is being recognised. If you don't have a personal tax account, you can usually set one up within a few minutes - just google for HMRC personal tax account.

The code S305L means you are taxed as a Scxottish resident and can earn up to £3,050 per year before being taxed. The previous code is Scottish and up to £12,690.