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    • peterg1965
    • By peterg1965 19th May 17, 1:46 PM
    • 2,010Posts
    • 1,707Thanks
    Tax Code on pension whilst still working
    • #1
    • 19th May 17, 1:46 PM
    Tax Code on pension whilst still working 19th May 17 at 1:46 PM
    My wife is now in receipt of her modest NHS pension and is still working part time in Healthcare, but not the NHS, her new part time role has started at the same time as she retired from the NHS. Her new salary will be about 12000-12500/ year, so just above the personal allowance threshold, and her pension is 6000/year.

    She hasn't spoken to the HMRC, but they have allocated all of her Tax allowance to her job - 1185L and given her a BR tax code for her pension.

    My question - is this the optimum way to use the tax code, and do you have a say in how it is allocated by HMRC? My initial thought was to split it 600L to pension and 585L to new job, but if this has exactly the same outcome then no action required.

Page 1
    • badmemory
    • By badmemory 19th May 17, 1:55 PM
    • 1,612 Posts
    • 2,123 Thanks
    • #2
    • 19th May 17, 1:55 PM
    • #2
    • 19th May 17, 1:55 PM
    My personal thought on this is to give a code that ALMOST covers the pension & just leaves a very small amount of tax payable and have the rest against the employment. My reasons are that the pension is forever & she may decide to leave the job tomorrow. That gives the (almost) maximum income until such time as the tax code gets sorted out. Rather than a drop of salary AND 20% of the pension. But as you say it will have exactly the same outcome.
    • Linton
    • By Linton 19th May 17, 2:18 PM
    • 9,385 Posts
    • 9,519 Thanks
    • #3
    • 19th May 17, 2:18 PM
    • #3
    • 19th May 17, 2:18 PM
    Any allocation of tax codes achieves the same result in the end. HMRC will set up one they believe to be appropriate, however you can ask them to change it however you want. I believe, but havent tried, that you can change the allocation yourself online using your personal tax account. The main issue is whether the allocation can be set up to minimise the necessity to make changes over time. The problem is that HMRC assumes that incomes rise with inflation and allocates additional allowances accordingly which can be rather a problem for fixed or highly variable income streams giving you allowances which you dont actually fill.

    So what I do is to to have all the allowances applied to my largest steady income stream which, although fixed, is larger than the overall tax allowance is likely to reach in the next decade. Then all other income streams are set to a zero tax code. However your circumstances may require something different.
    • peterg1965
    • By peterg1965 19th May 17, 7:34 PM
    • 2,010 Posts
    • 1,707 Thanks
    • #4
    • 19th May 17, 7:34 PM
    • #4
    • 19th May 17, 7:34 PM
    Thank you both for your input, appreciated.
    • quotememiserable
    • By quotememiserable 19th May 17, 7:50 PM
    • 412 Posts
    • 268 Thanks
    • #5
    • 19th May 17, 7:50 PM
    • #5
    • 19th May 17, 7:50 PM
    The way they've done it means she'll pay exactly the right amount of tax.
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