Estimated income - how is it calculated?

thingswerentthisbadinmyday

Following some excellent advice (I think a ML article in the DM), I opted to withdraw a token £100 from my existing Drawdown SIPP with HL. I’m not bothered about triggering the MPAA but what it does achieve is to correct my tax code to ‘BR’ in anticipation of future withdrawals.
Given that the £100 was received at the end of May (month 2 of 2025-26), I was shocked to see that HMRC have somehow used this figure to estimate my annual income from HL to be £1861 for the current tax year.
I could have understood an estimate of (say) £100 per month, to give a full year figure of £1100 (or even £1200), but £1861?? Where on earth might this have come from?
I do not intend going through the pain barrier of trying to contact the Revenue and have logged onto my online account and attempted to amend the figure. We’ll see if this works.

Dazed_and_C0nfused

thingswerentthisbadinmyday said:

Following some excellent advice (I think a ML article in the DM), I opted to withdraw a token £100 from my existing Drawdown SIPP with HL. I’m not bothered about triggering the MPAA but what it does achieve is to correct my tax code to ‘BR’ in anticipation of future withdrawals.
Given that the £100 was received at the end of May (month 2 of 2025-26), I was shocked to see that HMRC have somehow used this figure to estimate my annual income from HL to be £1861 for the current tax year.
I could have understood an estimate of (say) £100 per month, to give a full year figure of £1100 (or even £1200), but £1861?? Where on earth might this have come from?
I do not intend going through the pain barrier of trying to contact the Revenue and have logged onto my online account and attempted to amend the figure. We’ll see if this works.

The explanation is here.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye13090

Is it possible HL have reported a start date for your pension in the middle part of tax month 2?  I think this is the date that is usually shown on your Personal Tax Account.

If so then I think it's possible that £100 for around a two week period could easily become £1,861, particularly when the start of this pension is part way through the tax year.

And at the end of the day it is just an estimate.  As you yourself have realised no one knows what your actual income from this pension is going to be as well as you do.  You could take £1, £10, £100, £1,000 or £10,000 next month and HMRC simply don't know that.

thingswerentthisbadinmyday

Dazed_and_C0nfused said:

The explanation is here.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye13090

Is it possible HL have reported a start date for your pension in the middle part of tax month 2?  I think this is the date that is usually shown on your Personal Tax Account.

If so then I think it's possible that £100 for around a two week period could easily become £1,861, particularly when the start of this pension is part way through the tax year.

And at the end of the day it is just an estimate.  As you yourself have realised no one knows what your actual income from this pension is going to be as well as you do.  You could take £1, £10, £100, £1,000 or £10,000 next month and HMRC simply don't know that.

Thanks for taking the time to reply.
I did have a quick look at the link you kindly posted but very quickly realised that I didn’t have the stamina to read past the first page!
In my naivety, I assumed that any estimate would have used a default period of monthly but I’m clearly wrong.
Sensible option is to keep a careful watch on my HMRC tax account to make sure that my recent amendment to the estimated income figure is recorded correctly.
Thanks again.

Dazed_and_C0nfused

thingswerentthisbadinmyday said:

Dazed_and_C0nfused said:

The explanation is here.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye13090

Is it possible HL have reported a start date for your pension in the middle part of tax month 2?  I think this is the date that is usually shown on your Personal Tax Account.

If so then I think it's possible that £100 for around a two week period could easily become £1,861, particularly when the start of this pension is part way through the tax year.

And at the end of the day it is just an estimate.  As you yourself have realised no one knows what your actual income from this pension is going to be as well as you do.  You could take £1, £10, £100, £1,000 or £10,000 next month and HMRC simply don't know that.

Thanks for taking the time to reply.
I did have a quick look at the link you kindly posted but very quickly realised that I didn’t have the stamina to read past the first page!
In my naivety, I assumed that any estimate would have used a default period of monthly but I’m clearly wrong.
Sensible option is to keep a careful watch on my HMRC tax account to make sure that my recent amendment to the estimated income figure is recorded correctly.
Thanks again.

It does use monthly (assuming that is what the pension company reported) but for the first month if the pension started part way through the month that £100 is actually equivalent to more than £100 per month.  And that would impact the rest of the calculation.

I would think you will see your figure on your Personal Tax Account in a couple of days.

thingswerentthisbadinmyday

Dazed_and_C0nfused said:

thingswerentthisbadinmyday said:

Dazed_and_C0nfused said:

It does use monthly (assuming that is what the pension company reported) but for the first month if the pension started part way through the month that £100 is actually equivalent to more than £100 per month.  And that would impact the rest of the calculation.

I would think you will see your figure on your Personal Tax Account in a couple of days.

Thanks agin
Starting to make a bit of sense now.