Tax query

johnnyren

Dazed_and_C0nfused said:

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

I’m afraid I’m not sure myself ,  I’m totally confused lol ,     I retired 2 years ago with a 500k pension pot invested with fidelity ,      I arranged a sum of 1400 pounds a month with my ifa to live on ,     I’m assuming that’s from my 25% tax free drawdown ,          I took on the job to get out the house and have a bit more to spend ,     My ifa was fully aware and never raised any issues ,        The company never took any tax off me so all good     
I thought my pension money was safe from tax and since the part time job Is around 6000 I was still under the pa as it’s seperate 
this all arose cause I got taxed this month on a monthly wage 

johnnyren

Dazed_and_C0nfused said:

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

Dazed_and_C0nfused said:

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

Dazed_and_C0nfused said:

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

Dazed_and_C0nfused said:

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

I would it is A ,    But I’ve already texted him outlining my concerns and will find out how the money forwarded to me is structured 

johnnyren

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

Albermarle

If the £1400 is only coming from the tax free 25% of the pension pot, it should not affect your tax position at all. 
HMRC would be unaware of it as it is not taxable income, so something seems not right somewhere.

Lowtrawler

johnnyren said:

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

In simple terms, if you had no income outside your pension, an IFA would usually recommend you take around £1400 per month per year made up of £1,050 taxable and £350 non-taxable out of your tax free pension. That would mean £12,600 of taxable income per year and £4,200 non-taxable. The £12,600 would not be taxed as it is within your personal allowance. However, as soon as your receive any other income, that income would be fully taxed.

The tax code you have received suggests something different is going on and so your IFA has obviously structured the £1,400 differently. You will be able to see that in your online personal tax account or your IFA can advise. I suspect they are varying how much of the £1,400 is being taken from your tax free pot and how much from your taxable pot in order to fully utilise your personal allowance and it might be as simple as them adjusting that for your current pay level.

johnnyren

Lowtrawler said:

johnnyren said:

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

In simple terms, if you had no income outside your pension, an IFA would usually recommend you take around £1400 per month per year made up of £1,050 taxable and £350 non-taxable out of your tax free pension. That would mean £12,600 of taxable income per year and £4,200 non-taxable. The £12,600 would not be taxed as it is within your personal allowance. However, as soon as your receive any other income, that income would be fully taxed.

The tax code you have received suggests something different is going on and so your IFA has obviously structured the £1,400 differently. You will be able to see that in your online personal tax account or your IFA can advise. I suspect they are varying how much of the £1,400 is being taken from your tax free pot and how much from your taxable pot in order to fully utilise your personal allowance and it might be as simple as them adjusting that for your current pay level.

Lowtrawler said:

johnnyren said:

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

In simple terms, if you had no income outside your pension, an IFA would usually recommend you take around £1400 per month per year made up of £1,050 taxable and £350 non-taxable out of your tax free pension. That would mean £12,600 of taxable income per year and £4,200 non-taxable. The £12,600 would not be taxed as it is within your personal allowance. However, as soon as your receive any other income, that income would be fully taxed.

The tax code you have received suggests something different is going on and so your IFA has obviously structured the £1,400 differently. You will be able to see that in your online personal tax account or your IFA can advise. I suspect they are varying how much of the £1,400 is being taken from your tax free pot and how much from your taxable pot in order to fully utilise your personal allowance and it might be as simple as them adjusting that for your current pay level.

Thanks for reply ,   It’s quite embarrassing not knowing exactly how my pension drawdown is structured ,    It’s something I will fix tomorrow 👍

Dazed_and_C0nfused

johnnyren said:

Lowtrawler said:

johnnyren said:

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

In simple terms, if you had no income outside your pension, an IFA would usually recommend you take around £1400 per month per year made up of £1,050 taxable and £350 non-taxable out of your tax free pension. That would mean £12,600 of taxable income per year and £4,200 non-taxable. The £12,600 would not be taxed as it is within your personal allowance. However, as soon as your receive any other income, that income would be fully taxed.

The tax code you have received suggests something different is going on and so your IFA has obviously structured the £1,400 differently. You will be able to see that in your online personal tax account or your IFA can advise. I suspect they are varying how much of the £1,400 is being taken from your tax free pot and how much from your taxable pot in order to fully utilise your personal allowance and it might be as simple as them adjusting that for your current pay level.

Lowtrawler said:

johnnyren said:

I have contacted my ifa and got a reply saying we can discuss it further tomorrow ,     But my earning from the job are within my personal allowance ,   So the 1400 payment must be seperate and not taxable ,       He seemed more concerned about ni contributions not being paid ,   But I believe Ive already hit my target for full state pension
i will be asking about how my pension payment is structured ,   I noticed some comments saying the drawdown payment should be coming just from the tax free part of the pot 

In simple terms, if you had no income outside your pension, an IFA would usually recommend you take around £1400 per month per year made up of £1,050 taxable and £350 non-taxable out of your tax free pension. That would mean £12,600 of taxable income per year and £4,200 non-taxable. The £12,600 would not be taxed as it is within your personal allowance. However, as soon as your receive any other income, that income would be fully taxed.

The tax code you have received suggests something different is going on and so your IFA has obviously structured the £1,400 differently. You will be able to see that in your online personal tax account or your IFA can advise. I suspect they are varying how much of the £1,400 is being taken from your tax free pot and how much from your taxable pot in order to fully utilise your personal allowance and it might be as simple as them adjusting that for your current pay level.

Thanks for reply ,   It’s quite embarrassing not knowing exactly how my pension drawdown is structured ,    It’s something I will fix tomorrow 👍

Somewhere in your Personal Tax Account there will be a place you can see what the pension company (and your employer) have been reporting in previous tax years.

Look for Your income tax and employment history 

NB.  It will include taxable pensions paid under PAYE.

poseidon1

Looking at your previous posts you appear to be Scottish tax resident.

If so, this would have been a useful thing to have lead with since Scottish tax rates on earned income and pensions differs from England which are I think most respondents maybe assuming.

Sounds me your query could be related to crossing the 19% Scottish starter rate into the 20% basic rate band.

johnnyren

poseidon1 said:

Looking at your previous posts you appear to be Scottish tax resident.

If so, this would have been a useful thing to have lead with since Scottish tax rates on earned income and pensions differs from England which are I think most respondents maybe assuming.

Sounds me your query could be related to crossing the 19% Scottish starter rate into the 20% basic rate band.

My apologies ,   Another thing I have learned 

johnnyren

Albermarle said:

If the £1400 is only coming from the tax free 25% of the pension pot, it should not affect your tax position at all. 
HMRC would be unaware of it as it is not taxable income, so something seems not right somewhere.

This is what I don’t understand,   All previous wages I received in the last 2 years whether I was paid weekly or fortnightly no tax was paid 
yet when I went on to a monthly wage I get taxed 70 pounds 
I can’t mind if I mentioned it on my op,   But the company changed hands a few months ago ,    There seems to be confusion regarding tax codes during the changeover ,     But how I’ve been taxed is a mystery