HMRC strike again!

Spivo46

I called HMRC this morning to question my new tax assessment they had made based on me receiving my first state pension payment. Difficult to understand the lady, but in summary;

I get my first weekly payment this week (week 16). On that basis they are adjusting my tax codes (as expected). They are assuming i will receive the full £12,547.60 despite it being part way through the year! They refuse to adjust it to reflect i will only receive approx £9000. They inform me that i will need to contact the DWP and get them to write to HMRC with the correct state pension estimate. The lady informed me that i should not worry because i can claim over paid tax back at the end of the year. All of my other income is now taxed based on a SP income of £12,547 - Absolute madness!!

Glad

That doesn't sound right to me.

When your tax code is adjusted for State Pension, I'd expect HMRC to use an estimate of what you'll receive during the tax year, not assume you'll have a full year's pension if you've only started part way through.

I'd be tempted to ring HMRC again and speak to someone else, as different advisers can sometimes explain things differently. If the estimate they hold really is wrong, it ought to be possible to get it corrected rather than waiting until the end of the tax year for a refund.

Hopefully someone who's started claiming their State Pension mid-year recently can confirm what happened in their case.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6676977/hmrc-strike-again

Presumably that new tax code is being operated on a non cumulative basis though, so on a monthly basis you will pay the correct amount of tax.

Not sure why HMRC couldn't explain this but it's almost certainly correct. And you will only be taxed on your entitlement for the year not the full 52 weeks.

SnowMan

https://www.litrg.org.uk/pensions/state-pension/tax-state-pension/how-tax-collected-state-pension#3

In the first year you get your state pension, you will likely receive payment for only part of the year. HMRC will normally include a full year's state pension in your PAYE coding notice and then tell your employer or pension payer to use a special type of code – called a week 1 or month 1 code. This should mean the correct part-year pension figure is taken into account in the PAYE calculation to make sure that you pay the right amount of tax.

p00hsticks

Yes, this topic comes up quite regularly and is frequently misunderstood.

As the previous posters have pointed out, your revised tax code should include a complete years State Pension payment in the amount, but with a non-cumulative 'X' marker to ensure the right amount of tax is deducted for the year.

Spivo46

https://forums.moneysavingexpert.com/discussion/comment/82076176#Comment_82076176

thanks for response.

The new tax codes based on me receiving a full years state pension are affecting my other income and therefore i am going to pay more tax, albeit only approx £650 extra which i can claim back next year. DWP informed HMRC that i will receive £241.30 per week over 53 weeks - it is now week 16!

Rodders53

What is the new Tax code issued? and what was the code before?

Spivo46

https://forums.moneysavingexpert.com/discussion/comment/82076190#Comment_82076190

I understand now, thank you and thanks to others who also pointed this out