State Pension & Occupation Pension

Lifeliver

I am currently on the State Pension at £1,004.48.

I had also been receiving a small Occupational Pension at £98 per 3 months until receiving a letter this morning, details below..

Receiving a letter this morning, my occupational Pension changes have been made as follows.

Gross Annuity £98.31 Per 3 months.

Less Taxt £43.60.

Net Annuity 54.71 per 3 months.

This seems a large amount of tax payable. I have no other income. Question; am i able to claim back the tax of £43.60 ?

Any advice or help gratefully received.

Thank you.

Baldytyke88

98.31 x 4 = 393.24

@ 393.24 20% tax = £78.65

Why do you think £43 is too high? Do you have a small amount of personal allowance left?

pinnks

It would appear that your SP is £1,004 every 4 weeks, so about £13,058 per year (yes, I know the taxable amount is a bit less but near enough for now).

Add on you £393.24 annuity and your taxable income is £13,451. Deduct your personal allowance and your income taxed at 20% is £881, giving tax of £176 for the year.

Divide that by 4 so that it is deducted under PAYE on the private pension every 3 months and you would expect to see £44 tax.

So, all looks fine to me.

hugheskevi

I am currently on the State Pension at £1,004.48.

Is that the 4-weekly amount? In which case £1,004.48 x (52 / 4) = £13,058.24.

The Personal Allowance is £12,570. £13,058.24 - £12,570 = £488.24 of income that has been paid without tax, and so there is a £488.24 x 20% = £97.65 underpayment of tax.

Gross Annuity £98.31 Per 3 months.

Less Taxt £43.60.

Net Annuity 54.71 per 3 months.

This seems a large amount of tax payable. I have no other income. Question; am i able to claim back the tax of £43.60 ?

All of this is taxable, so £98.31 x 4 = £393.24, and £393.24 x 20% = £78.65 of tax due.

£97.65 + £78.65 = £176.30. Allocating that to quarterly payments gives £176.30 / 4 = £44.08.

Which looks very close to the £43.60 that is being deducted.

Worth noting that you are getting close to 50% deduction of tax on the annuity, and with Personal Allowances frozen but State Pension triple-locked the amount of tax due will increase each year. Once the tax deducted reaches 50% of the annuity, it will be capped at that level, and you will have to make a separate tax payment to cover the remaining amount of tax owed.

dasherman

Assuming the £1,004 is 4 weekly, the tax payable seems right to me.

Lifeliver

Thank you all for your input, very helpful and appears to be correct. Amazing, as soon as i get a state pension rise i am taxed on it along with my occupational pension, given in one hand and taken from the other, so the SP rise means nothing… Anyway at least i understand now…

My second question was, am i able to claim this tax back from the HMRC ?

molerat

My second question was, am i able to claim this tax back from the HMRC ?

Why do you think you would be able to claim correctly deducted tax back ?

TadleyBaggie

https://forums.moneysavingexpert.com/discussion/comment/82053408#Comment_82053408

A increase in the state pension hardly means nothing. At most you will get a 20% deduction. So 80% of something is still a win.

QrizB

the SP rise means nothing

You're paying 20% tax on £488pa of state pension. That means you're keeping £390pa of it.

That's rather more than nothing.

My second question was, am i able to claim this tax back from the HMRC ?

Is there any particular reason why you feel you're entitled to claim it back?

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82053408#Comment_82053408

closest would be to pay £2880 into a SIPP every year to get £720 tax relief added which would be more than the tax you’re paying.

but you’ll pay 15% tax on what you withdraw. Still possibly worth doing

snowlaser

https://forums.moneysavingexpert.com/discussion/comment/82053408#Comment_82053408

You're taxed at 20% on it, so you keep 80%. Not "nothing".

It's even worse for workers, whose pay rises get NI charged as well as tax.