NHS pension and tax

PoGee

I'm getting to the stage where I feel unwell at the thought of going into work. It's management, staff shortages etc.

Remedy calculation as of march 2014 - lump sum £30k and pension £11300. Non remedy calculation as at march 2024 - lump sum £22500 and pension £12100.

If I take either one of the 2 scenarios, will I pay tax on my pension? I know I'll need to pay income tax as I'll have rental income but not sure if the lump sum will be taxed.

itsthelittlethings

Probably not depending on your tax code. Your can’t be at state pension age yet? If you pay income tax it would be pennies.

itsthelittlethings

I don’t know about the lump sum, presumably someone here knows about lump sums.

Flugelhorn

my lump sum was  not taxable  in the NHS  and if they have quoted you those figures then the lump sum will not be taxable 

LightFlare

I can confirm that your lump sum will not be taxed

(myself and my partner have just received ours and it isn’t taxable - there is a threshold, but you are nowhere near it)

Aretnap

The lump sum is not taxable. The pension itself is taxable. If either £11300 or £12100 was your only income then you wouldn't actually have to pay any tax as both figures are below the personal allowance. How much tax you have to pay in practice will depend on how much rental income you have, along with any income from other sources 

PoGee

Thank you forum members for replies. I'm not state pension age - I've another 7-8 years. I worked out that I need £1600 a month to live comfortably. I'll have some rental income and my son said he'd give me a £100 a month pocket money (role reversal!).
Am I correct in thinking that if the above values are  'as of March 2024', that I should expect a wee bit more once I retire? 

Flugelhorn

PoGee said:

Thank you forum members for replies. I'm not state pension age - I've another 7-8 years. I worked out that I need £1600 a month to live comfortably. I'll have some rental income and my son said he'd give me a £100 a month pocket money (role reversal!).
Am I correct in thinking that if the above values are  'as of March 2024', that I should expect a wee bit more once I retire? 

The NHS pension gets revalued annually based on the September  CPI - we got 6.7% in April 2024 and 1.7% in April 2025 - so presume you will get a bit more  

cosmo123

I retired early from the NHS (age 57) so recently went through this process - the answer = no you get the lump sum tax free but the monthly pension is taxable dependent on your income (£12570 is tax free income for everyone) - obviously everything else is counted as taxable income

Dazed_and_C0nfused

cosmo123 said:

I retired early from the NHS (age 57) so recently went through this process - the answer = no you get the lump sum tax free but the monthly pension is taxable dependent on your income (£12570 is tax free income for everyone) - obviously everything else is counted as taxable income

Unless your Personal Allowance is £11,310 (Marriage Allowance applicant) or have adjusted net income of £100,002 or more.

german_keeper

cosmo123 said:

I retired early from the NHS (age 57) so recently went through this process - the answer = no you get the lump sum tax free but the monthly pension is taxable dependent on your income (£12570 is tax free income for everyone) - obviously everything else is counted as taxable income

Apologies if I have misunderstood but you seem to be suggesting that income covered by the PTA is not taxable. That is incorrect, it is taxable income. Might sound a little pedantic but in some circumstances it can be an important distinction.

One example, recently my self employed daughter completed her tax return and phoned me to say that HMRC were charging her too much National Insurance. Her partner. who works as an auditor for a major bank agreed with her. The mistake that they were making was to calculate her taxable income as her income less PTA.