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Salary vs Pension Taxed
I am a recent "pensioner" who has taken my State Pension, but continue to work. Currently my salary is at least 3x my monthly Pension but has only 3k or so of my tax allowance applied to it while my pension has the rest.
As my salary is so much more than my pension, I would prefer to have all my tax allowance appl;ied to salary and have my pension taxed as I'd be far, far better off financially.
Is that even possible? If so, is it just a call and request to HMRC of doable through the "app?
Comments
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well since the state pension cannot be taxed at source, you have no option to be taxed the way you suggest. Additionally it would make no difference to the amount you would ultimately receive.
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Currently …….. Rachel from accounts is said to have a plan !!
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Why do you think you would be"far better off financially'?
You would pay the exact same amount of tax. Anyways, as said, it's not possible.
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Are you maybe not receiving the full state pension? I am just wondering why you seem to have £3k of "tax allowance" left for the salary.
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As my salary is so much more than my pension, I would prefer to have all my tax allowance appl;ied to salary and have my pension taxed as I'd be far, far better off financially.
Can you we expand on why you think this (if it was possible) would leave you better of financially? Because that's not generally how Income tax works.
Here's a simplified illustration.
Let's imagine your personal allowance is £12k, your state pension is £9k and your salary is £27k.
Currently, all £9k of SP is untaxed, leaving £3k of personal allowance for your salary. This means that £24k of your salary is taxed at 20%, so you're paying £4800 in income tax.
Imagine instead that the personal allowance was applied to your salary and your SP was taxed. You'd be paying £20% on £9k os SP, which is £1800. You'd also be paying 20% on £15k of your salary, which is £3k. Your total tax paid is therefore £3k + £1800, which is £4800, exactly the same as before.
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...salary is at least 3x my monthly Pension
State Pension isn't paid monthly, it's every four weeks by default, i.e. 13 payments per year.
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How would having, say ,£800 pm tax taken of you state pension rather than £800 pm tax taken of your PAYE salary?
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education is key here methinks
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