Tax on small LGPS pension

dont_use_vistaprint

DRS1 said:

You could try logging on to your personal tax account.  You may find a PAYE box has appeared on there and it should show you the payment and any tax deducted from it.  It may also show an estimate for the total pension this tax year and any tax on it.

they have taxed the payment taken £80 off of 404.88 as I expected. They have my annual income for this tax year as £1,677.

so I guess I am back to the original question of the post will this resolve itself or do I need to fill in some forms 

molerat

To deduct that tax it looks like they have used the "new employee no declaration" code of 0TW1 which is a bit of a bummer.  With an X suffix code in place you will not get that tax back through PAYE.  With no other income streams this year you should tell HMRC to allocate the full allowance on a cumulative basis which will recover that tax on the next payment.

Dazed_and_C0nfused

molerat said:

To deduct that tax it looks like they have used the "new employee no declaration" code of 0TW1 which is a bit of a bummer.  With an X suffix code in place you will not get that tax back through PAYE.  With no other income streams this year you should tell HMRC to allocate the full allowance on a cumulative basis which will recover that tax on the next payment.

Which in itself is very unusual as the op is taking his LGPS pension, not starting a new employment.

dont_use_vistaprint

I think I might have  found the error, navigating the various screens from the HMRC app. It looks to me like a mistake has been made..

main screen 

Estimated taxable income

The amount of income you will pay tax on.

£1,677

Income received to date

How much you have been paid since 6 April 2025.

£404

Tax code

1257LX

Payments made screen

Date	Taxable income (£)	Income Tax paid (£)	National Insurance paid (£)
31 December 2025	404.88	80.80	0.00
Total	404.88	80.80	0.00

Using the figures supplied by your pension provider we estimate your annual taxable income from them will be £1,677.

Then, when I click into the income tax estimate screen, I get this

Your PAYE Income Tax estimate

Total estimated income£16,677

Income Tax estimate

£821

£0£16,677

£12,570

Key	Item	Amount
	Income you do not pay tax on	£12,570
	Income you do pay tax on	£4,107
	Income Tax estimate	£821

it looks to me like someone is incorrectly typed in 16677 into one screen and 1677 into another screen ?


do you think this is best resolved with the pension provider or HMRC ? 

It's not a big deal £80 a month being taken but it's a pain because I know when you don't do a self assessment anymore it can take until around November for it to resolve itself they are really slow at issuing money back even after the calculations are done the start of April showing overpay tax

Dazed_and_C0nfused

dont_use_vistaprint said:

I think I might have  found the error, navigating the various screens from the HMRC app. It looks to me like a mistake has been made..

main screen 

Estimated taxable income

The amount of income you will pay tax on.

£1,677

Income received to date

How much you have been paid since 6 April 2025.

£404

Tax code

1257LX

Payments made screen

Date	Taxable income (£)	Income Tax paid (£)	National Insurance paid (£)
31 December 2025	404.88	80.80	0.00
Total	404.88	80.80	0.00

Using the figures supplied by your pension provider we estimate your annual taxable income from them will be £1,677.

Then, when I click into the income tx estimate screen, I get this

Your PAYE Income Tax estimate

Total estimated income£16,677

Income Tax estimate

£821

£0£16,677

£12,570

Key	Item	Amount
	Income you do not pay tax on	£12,570
	Income you do pay tax on	£4,107
	Income Tax estimate	£821

it looks to me like someone is incorrectly typed in 16677 into one screen and 1677 into another screen ?


do you think this is best resolved with the pension provider or HMRC ? 

It's not a big deal £80 a month being taken but it's a pain because I know when you don't do a self assessment anymore it can take until around November for it to resolve itself they are really slow at issuing money back even after the calculations are done the start of April showing overpay tax

The pension company can only go off HMRC's instructions so pretty pointless asking them.

If the emergency tax code (1257L) has now been sent to the pension company then you won't have any tax deducted from your next payment (assuming it's not more than £1,048).

What you could try and sort with HMRC is the issue of a cumulative tax code, so that the pension company refund the £80.80 at the end of January.

I very much doubt anyone types that information in, the difference between £16,677 and £1,677 is exactly £15,000, which is mentioned here.  Have you had another pension or job in this tax year?

dont_use_vistaprint

Dazed_and_C0nfused said:

dont_use_vistaprint said:

I think I might have  found the error, navigating the various screens from the HMRC app. It looks to me like a mistake has been made..

main screen 

Estimated taxable income

The amount of income you will pay tax on.

£1,677

Income received to date

How much you have been paid since 6 April 2025.

£404

Tax code

1257LX

Payments made screen

Date	Taxable income (£)	Income Tax paid (£)	National Insurance paid (£)
31 December 2025	404.88	80.80	0.00
Total	404.88	80.80	0.00

Using the figures supplied by your pension provider we estimate your annual taxable income from them will be £1,677.

Then, when I click into the income tx estimate screen, I get this

Your PAYE Income Tax estimate

Total estimated income£16,677

Income Tax estimate

£821

£0£16,677

£12,570

Key	Item	Amount
	Income you do not pay tax on	£12,570
	Income you do pay tax on	£4,107
	Income Tax estimate	£821

it looks to me like someone is incorrectly typed in 16677 into one screen and 1677 into another screen ?


do you think this is best resolved with the pension provider or HMRC ? 

It's not a big deal £80 a month being taken but it's a pain because I know when you don't do a self assessment anymore it can take until around November for it to resolve itself they are really slow at issuing money back even after the calculations are done the start of April showing overpay tax

The pension company can only go off HMRC's instructions so pretty pointless asking them.

If the emergency tax code (1257L) has now been sent to the pension company then you won't have any tax deducted from your next payment (assuming it's not more than £1,048).

What you could try and sort with HMRC is the issue of a cumulative tax code, so that the pension company refund the £80.80 at the end of January.

I very much doubt anyone types that information in, the difference between £16,677 and £1,677 is exactly £15,000, which is mentioned here.  Have you had another pension or job in this tax year?

No, I've not worked or have any UK income for the past three years, other than a bit of non-ISA savings interest.

The figure 15,000 means nothing to me and those two numbers are so similar to me. It looks like a mistake

You would be surprised how processes work in the public sector, people regularly type information from one screen to another because of historic separation when you go into the HMRC app you can see it's an amalgamation of about four different systems

dont_use_vistaprint

So I managed to speak to them yesterday, they said there is 15,000 of other income showing up as an estimate must be from a previous tax return, but I will not be taxed on it. Even though I showed him the screen where it says it's private pension income, not other income, clearly an error.

I also said the reason I pay tax is that they didn't have a tax card for me until the pension provider put in the request which triggered one, even though I showed them proof that I have a tax code of 1257L already before this

they said it won't happen again and I will get the tax back after the tax year which from my experience means November 2026.

i'm not confident at all that it won't happen again, if it does I will do the online complaint process which seems to resolve it pretty fast and you get paid compensation as well