You may be paying tax on savings interest when you should not be.

aussie96

I was being deducted about £8 to £10 a month from a small civil service pension.Sorry have not got exact figures as no monthly earning have been received and started pension half way through tax year but know what should have been paid per month excluding tax. The other pension is a sipp I control.

aussie96

Sorry no information on exact earnings but i did receive moneys monthly

eskbanker

If you started the pension halfway through the tax year then presumably you'll be expecting twice as much income from it in 2026/27 as you did in 2025/26, so adjustments will usually be needed to align PAYE codings with realistic income forecasts. However, if you provided HMRC with an accurate forecast of the expected income in 2025/26 and the coding was set up to reflect that, then there shouldn't have been any deductions, but what do you mean by "no monthly earning have been received", i.e. what were the deductions taken from?

Edit: cross-post. You presumably have payslips, P60, etc?

aussie96

nope not for civil service pension I received nothing except the original earnings forecast.The earnings for the year have not gone over £12570 so again this is the issue, why am I paying tax and again I come back to interest on savings which does not exceed the £6000 limit. The problem is not related to earnings it is the tax on interest earned from savings which i have been taxed on and would have still been taxed on if i did not look at my online account and phone HMRC as they had the figure of £1000 instead of £6000 because of what I was told the 2 income sources. It should not happen but it did happen and was going to happen again this tax year.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81974992#Comment_81974992

I don't claim to understand tax codes but if you add 1140 to 117 that gets you to 1257 which is what you'd expect as a tax code for someone with the full personal allowance. Unless they have deducted something from the code (187?) they are not trying to tax you on the untaxed interest.

If there has been a tax deduction from the civil service pension that is presumably because it is more than the tax code equivalent - eg your pension is £12000pa when the tax code is 1140 which would mean c £600 would be taxed at 20% - £120 pa or £10 per month.

eskbanker

Savings may have something to do with it but if they believe you owed tax on £187 of savings interest, then this would be a tax liability of £37, which obviously doesn't correspond with what was deducted?

You mention a code of 117T on the new smaller pension, so did you earn £1170 in whichever year that relates to?

aussie96

no under that amount and also saving interest was slightly higher last year so it corresponds with deductions. The £187 relates to this tax year but should not have been on the system because of my earnings under £12570. That is the problem and the HMRC lady agreed thats why she changed it to £0 so I would not be deducted any tax this tax year. As i mentioned in the first post It was explained to me that the 2 incomes instead of just 1 was the course of the problem on the system it should not of happened but it did.

Dazed_and_C0nfused

You must have spoken to a trainee then. Two incomes isn't an issue and nothing you have posted has shown tax would be deducted incorrectly in this tax year.

aussie96

I am sorry but I was transferred to the lady from somebody who did not know. I am only relaying my experience and if you choose not to accept that then I cannot convince you otherwise. I was told it was because of two incomes so I have no other explanation for you.

eskbanker

Not sure there's much to be gained by continuing to try to piece together what actually happened, but the bottom line is that if there was tax deducted last year when it shouldn't have been, for whatever reason, then it'll be refunded once the full year position is known - PAYE coding is only ever a provisional mechanism for collecting tax, and assessment of actual liability can only be finalised once HMRC has visibility of all the relevant data, typically in autumn.