We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

HMRC 'prioritises' personal allowance tax code against state pension and wont change to army pension

Options
I went through the delightful experience of waiting 45 minutes on the HRMC phone last month to get the correct tax code and apply it to my army pension - reason, to have all the allowance be used against one pension and better understand the numbers.

This month is the first month of state pension and I got a tax code showing most of the personal allowance would apply to state pension, and £185 to the army pension, against my wishes of a month ago.

Another 30 minutes on hre HMRC phone before being told 'this is what we do, and wont change it back'.  The helpline person was unable to state why, or change it back, and was pretty reluctant to get feedback.

Does it change what I get/how much tax  I pay overall, just makes the numbers harder for me to follow, as a person who took 3 goes to get a 'D' in maths in 1979!

Does anyone know why they do this?

Comments

  • Hoenir
    Hoenir Posts: 7,742 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 17 July at 9:38AM


    This month is the first month of state pension and I got a tax code showing most of the personal allowance would apply to state pension, and £185 to the army pension, against my wishes of a month ago.


    Yes it's how the HMRC has always operated. As the DWP pension system isn't built in the same manner as a payroll system. The state pension is paid gross. Your wishes are of no consequence. 

    The HMRC receives many timewasting calls that's why it takes so long to get through these days. 

  • SiliconChip
    SiliconChip Posts: 1,823 Forumite
    1,000 Posts Third Anniversary Name Dropper
    edited 17 July at 11:12AM
    Why is having 185 applied to your army pension any more difficult to understand than if it was 1257? If you really don't understand the figures then post the details from your army pension payslip here and we'll explain it to you.
  • eskbanker
    eskbanker Posts: 37,059 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Does anyone know why they do this?
    The sole purpose of tax codes is to drive PAYE deductions, so, as PAYE isn't used for state pension payments, such codes can only be issued to other payers.

    Does it change what I get/how much tax  I pay overall
    No.
  • sheramber
    sheramber Posts: 22,440 Forumite
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    There is no facility to deduct tax from the state pension when it is  paid. It is paid gross. 

    Your tax bill is calculated on your annual income and it makes no difference  which pension  your personal allowance is used against. 

     Your tax bill is the same.

    It just means the tax is deducted from your army pension . 

  • LITRG
    LITRG Posts: 75 Organisation Representative
    Eighth Anniversary 10 Posts Photogenic Combo Breaker
    Hello, we look in detail at how state pension is taxed here: https://www.litrg.org.uk/pensions/state-pension/tax-state-pension/how-tax-collected-state-pension. We are not aware it is possible to 'opt out' of having your PAYE code adjusted for it: https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye12040. Hope this helps
    Official Company Representative
    I am an official representative of LITRG (Low Incomes Tax Reform Group) part of the Chartered Institute of Taxation who are an educational charity. We are not part of MSE or HMRC. MSE has given permission for me to post on the Forum but this does NOT imply any form of approval of my organisation or its products by MSE. We can’t give individual advice, but if you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here. If you believe I am posting inappropriately please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.