Tax on private pension

twitchy

Good day everyone,
I've recently retired early at 65 from a job with a local authorityand am taking an income from 3  pensions, I've taken the maximum tax free lump sum from each one and taken the remainder as drawdown. I can take my state pension next March.
Private Pension 1 is a gross amount of £1000 per month for 10 years with a tax code of BR which means I'm paying 20% tax on this pension.
Private Pension 2 is a gross amount of £122 per month also with a tax code of BR which means I'm also paying 20%tax on this pension.
Pension 3 is the local authority pension which is £158 per month with a tax code of 1163L.
My total income for the year is £15374 and my allowance according to the HMRC website is £12570.
My question which might sound stupid is why am I paying so much tax?
I might be missing something quite simple but I can't make it make sense, surley I should take my allowance from the total leaving me with a taxable income of £2790?
I know that the people reading this will be a lot smarter in matters relating to tax and pensions so please be gentle.
Many Thanks,
Dave

Dazed_and_C0nfused

twitchy said:

Good day everyone,
I've recently retired early at 65 from a job with a local authorityand am taking an income from 3  pensions, I've taken the maximum tax free lump sum from each one and taken the remainder as drawdown. I can take my state pension next March.
Private Pension 1 is a gross amount of £1000 per month for 10 years with a tax code of BR which means I'm paying 20% tax on this pension.
Private Pension 2 is a gross amount of £122 per month also with a tax code of BR which means I'm also paying 20%tax on this pension.
Pension 3 is the local authority pension which is £158 per month with a tax code of 1163L.
My total income for the year is £15374 and my allowance according to the HMRC website is £12570.
My question which might sound stupid is why am I paying so much tax?
I might be missing something quite simple but I can't make it make sense, surley I should take my allowance from the total leaving me with a taxable income of £2790?
I know that the people reading this will be a lot smarter in matters relating to tax and pensions so please be gentle.
Many Thanks,
Dave

That doesn't really make sense.

You cannot just pretend your employment income never existed.

What are the actual details for the whole tax year??

Mark_d

The way you're being taxed is the way the tax code system works.  If you overpay tax this year then your tax code will be adjusted next year so that your overpayment comes back to you.

QrizB

twitchy said:

I've recently retired early at 65 from a job with a local authority

Exactly how recently have you retired? Have you received your P45 from the local authority? How much employment income have you received this tax year?

molerat

Have you entered the correct estimated income for the year from each source in your tax account ?

What was the tax code used on your LA employment ?

twitchy

I finished work on 30/06/2025 and my P45 amount is £11258.83 and my tax code was 1130L

MallyGirl

twitchy said:

I finished work on 30/06/2025 and my P45 amount is £11258.83 and my tax code was 1130L

So your employment has used up nearly all of the £12570 allowance so you will be taxed on most of the pension income this year

DE_612183

so you'd used up some of your personal allowance on your old job, also why was your old code 1130L is that what it was on your previous payslips - or just the final one?

DE_612183

MallyGirl said:

twitchy said:

I finished work on 30/06/2025 and my P45 amount is £11258.83 and my tax code was 1130L

So your employment has used up nearly all of the £12570 allowance so you will be taxed on most of the pension income this year

would it have been?

surely for the 3 months each pay would allow 1/12th of the PA - so basically only £3k would have been used....

unless of course he paid no tax whatsoever in April, May & June...

DRS1

The tax gurus will know but if you have tax codes of 1130 or 1163 instead of 1257 doesn't that mean you have some other income - bank savings interest perhaps.

MallyGirl

Or a BIK like private health