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    • curlydog
    • By curlydog 8th May 18, 7:57 PM
    • 8Posts
    • 3Thanks
    curlydog
    Pensioners Tax Code Help
    • #1
    • 8th May 18, 7:57 PM
    Pensioners Tax Code Help 8th May 18 at 7:57 PM
    My mum was widowed in October last year, having not worked for many years and relied solely on her husbands pension. She had no independent income, other than the state pension (she's just turned 70).

    In October she started to draw the spouses pension from her husband's company pension.

    She has a P60, issued in April this year, which shows a final tax code of 1150L. Her first pension/pay slip of this tax year (issued in April) shows a tax code 269L.

    This seems very low so I advised her to ring HMRC. They said it was right.

    I'm a complete novice regarding tax matters, but I though a pensioner should not be paying any tax on the first 11500 (hence the tax code 1150L). The new tax code indicates that she is paying tax on all her income except the first 2690 which seems extremely low.

    Does this appear right?

    Thanks
Page 1
    • zagfles
    • By zagfles 8th May 18, 8:02 PM
    • 13,331 Posts
    • 11,316 Thanks
    zagfles
    • #2
    • 8th May 18, 8:02 PM
    • #2
    • 8th May 18, 8:02 PM
    The state pension is paid tax free, so that's normally chopped off the tax code for any other pension.
    • Dazed and confused
    • By Dazed and confused 8th May 18, 8:07 PM
    • 2,929 Posts
    • 1,426 Thanks
    Dazed and confused
    • #3
    • 8th May 18, 8:07 PM
    • #3
    • 8th May 18, 8:07 PM
    The State Pension is taxable but DWP don't ever deduct any tax from it.

    Her tax code will include a deduction for the State Pension so that overall she should be paying roughly the correct amount of tax.

    Depending on the amount of each pension she received in the 2017:18 tax year she may owe some tax for last year but without full details it's impossible to say for certain.

    A tax code of 269L suggests she has a State Pension of around 176/week or 763 every 4 weeks. Note State Pension cannot be paid monthly.

    The tax code would be
    11,850 Personal Allowance less State Pension 9160 = 2690 allowances left = tax code 269L

    The result of this is that, as you hoped, she isn't paying any tax on the first 11,850 of her pension income (9,160 from DWP and 2,690 from her new pension).
    Last edited by Dazed and confused; 08-05-2018 at 8:09 PM.
    • curlydog
    • By curlydog 8th May 18, 8:11 PM
    • 8 Posts
    • 3 Thanks
    curlydog
    • #4
    • 8th May 18, 8:11 PM
    • #4
    • 8th May 18, 8:11 PM
    The state pension is paid tax free, so that's normally chopped off the tax code for any other pension.
    Originally posted by zagfles
    That may be it then. If I subtract the annual state pension from the 11500 allowance it leaves 2956 which I guess is somewhere in the region for a tax code of 269L.

    thanks for your information
    • curlydog
    • By curlydog 8th May 18, 8:19 PM
    • 8 Posts
    • 3 Thanks
    curlydog
    • #5
    • 8th May 18, 8:19 PM
    • #5
    • 8th May 18, 8:19 PM
    The State Pension is taxable but DWP don't ever deduct any tax from it.

    Her tax code will include a deduction for the State Pension so that overall she should be paying roughly the correct amount of tax.

    Depending on the amount of each pension she received in the 2017:18 tax year she may owe some tax for last year but without full details it's impossible to say for certain.

    A tax code of 269L suggests she has a State Pension of around 176/week or 763 every 4 weeks. Note State Pension cannot be paid monthly.

    The tax code would be
    11,850 Personal Allowance less State Pension 9160 = 2690 allowances left = tax code 269L

    The result of this is that, as you hoped, she isn't paying any tax on the first 11,850 of her pension income (9,160 from DWP and 2,690 from her new pension).
    Originally posted by Dazed and confused
    Great information. Thank you
    • agrinnall
    • By agrinnall 9th May 18, 8:37 AM
    • 21,002 Posts
    • 16,781 Thanks
    agrinnall
    • #6
    • 9th May 18, 8:37 AM
    • #6
    • 9th May 18, 8:37 AM
    She should have received a coding notice during March/April that explains how the tax code is arrived at.
    • buzzard
    • By buzzard 16th May 18, 9:13 AM
    • 219 Posts
    • 3,020 Thanks
    buzzard
    • #7
    • 16th May 18, 9:13 AM
    • #7
    • 16th May 18, 9:13 AM
    I advise you to check the tax code carefully. I have just discovered that the Pension Service are declaring to the Inland Revenue that I should pay tax on 14 weeks pension in the last financial year. However I didnt receive 14 weeks pension - one was a part week and the last 4 weeks payment fell into the next financial year.

    I suspect that this is something they consistently get wrong. You might think it makes very little difference - but I dont imagine when you die anyone is going to be checking your tax code and you may end up being taxed on up to 4 weeks pension that you havent actually been paid.
    • agrinnall
    • By agrinnall 16th May 18, 9:22 AM
    • 21,002 Posts
    • 16,781 Thanks
    agrinnall
    • #8
    • 16th May 18, 9:22 AM
    • #8
    • 16th May 18, 9:22 AM
    I advise you to check the tax code carefully. I have just discovered that the Pension Service are declaring to the Inland Revenue that I should pay tax on 14 weeks pension in the last financial year. However I didnt receive 14 weeks pension - one was a part week and the last 4 weeks payment fell into the next financial year.

    I suspect that this is something they consistently get wrong. You might think it makes very little difference - but I dont imagine when you die anyone is going to be checking your tax code and you may end up being taxed on up to 4 weeks pension that you havent actually been paid.
    Originally posted by buzzard
    If you're talking about state pension then it may not be wrong, as I understand it the amount used for tax purposes is what they say they are due to pay in the year, even if the actual payments are slightly out and some of it falls into the previous or next tax year.
    • 00ec25
    • By 00ec25 16th May 18, 12:59 PM
    • 6,982 Posts
    • 6,657 Thanks
    00ec25
    • #9
    • 16th May 18, 12:59 PM
    • #9
    • 16th May 18, 12:59 PM
    I advise you to check the tax code carefully. I have just discovered that the Pension Service are declaring to the Inland Revenue that I should pay tax on 14 weeks pension in the last financial year. However I didnt receive 14 weeks pension - one was a part week and the last 4 weeks payment fell into the next financial year.

    I suspect that this is something they consistently get wrong. You might think it makes very little difference - but I dont imagine when you die anyone is going to be checking your tax code and you may end up being taxed on up to 4 weeks pension that you havent actually been paid.
    Originally posted by buzzard
    a lot of people consistently fail to understand how state pension works

    the state pension is declared to HMRC as how much you are entitled to receive in the tax year, not what you actually receive as cash in the tax year

    that is why when doing a tax return you are expected to use the figures on the letter sent to you by DWP setting out how much you will get each week times number of weeks (it may be a 53 week tax year for example). That also then picks up the slight delay in April when the pension entitlement is increased just after the start of the tax year so you have x weeks at A/week and x weeks at B/week

    if you simply declare the cash received in your bank between 6th to 5th April then you risk HMRC rejecting your tax return as it will be deemed to be wrong
    Last edited by 00ec25; 16-05-2018 at 1:02 PM.
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