Tax Code Lowered

[Jack1960]

Ive been informed by HMRC that my Tax Code will 998L until i pay back tax from 22/23 , due to getting my pension , anyone else had this ?

[Wat69]

Tax codes are bespoke to an individual persons circumstances if you open an online tax account with HMRC you will be able to see how they have arrived at that code you can also query it online if you feel it’s incorrect

[freespeech]

Ive been informed by HMRC that my Tax Code will 998L until i pay back tax from 22/23 , due to getting my pension , anyone else had this ?

I'd be surprised if your tax code has changed "due to geting your pension". I suspect you have underpaid tax in a previous year and they are now clawing it back.

[Jack1960]

Ive been informed by HMRC that my Tax Code will 998L until i pay back tax from 22/23 , due to getting my pension , anyone else had this ?

I'd be surprised if your tax code has changed "due to geting your pension". I suspect you have underpaid tax in a previous year and they are now clawing it back.

Went online to check and yes my pension that i took in september pushed me into 40 percent tax bracket as my total income was over the threshold

[freespeech]

Ive been informed by HMRC that my Tax Code will 998L until i pay back tax from 22/23 , due to getting my pension , anyone else had this ?

I'd be surprised if your tax code has changed "due to geting your pension". I suspect you have underpaid tax in a previous year and they are now clawing it back.

Went online to check and yes my pension that i took in september pushed me into 40 percent tax bracket as my total income was over the threshold

That isn't the reason......your tax code doesn't change if you hit 40% tax.

[renrag40]

Is it not the case that because you have not retired the pension is paid tax free and your main incomes tax free allowance is reduced to reflect this?
This is what happened to a friend of mine who carried on working after she received her state pension at 60. Her non taxable allowance was reduced to virtually zero on her salary.

[freespeech]

Is it not the case that because you have not retired the pension is paid tax free and your main incomes tax free allowance is reduced to reflect this?
This is what happened to a friend of mine who carried on working after she received her state pension at 60. Her non taxable allowance was reduced to virtually zero on her salary.

A reduction of allowance is to recoup underpaid tax. Receiving state pension has no impact on your tax allowance. Money must have been owed.

[max49]

I had a similar experience after receiving my pension when I turned 60 in the December. For that tax year it was paid to me in full, the following tax year my tax code was changed in order to collect the tax (at 20% rate) which was owed on the pension payments from December to the end of the tax year as I was still working. The code changed for the year and then returned to the normal rate the following year and my pension was taxed at 20%.

[P13]

Your tax free allowance is reduced by the amount of state pension you receive

[freespeech]

Your tax free allowance is reduced by the amount of state pension you receive

As above......pension is just seen as income and nothing changes. The tax code changes because you haven't paid enough tax.

https://www.gov.uk/tax-on-pension

[P13]

Your tax free allowance is reduced by the amount of state pension you receive

As above......pension is just seen as income and nothing changes. The tax code changes because you haven't paid enough tax.

https://www.gov.uk/tax-on-pension

I dealt with my father's finances when he was ill , his tax free allowance on his royal mail pension wage slip was definitely lowered by his state pension amount .

[Jack1960]

Thanks for replies, I'm not getting my state pension yet as i'm still 65.
My total pay from RM last tax year 22/23 was just over 40,000.
I also got 13 thousand from my RM pensions so my total income was just over 53 thousand.
The HRMC website states i owe them x amount and the tax code is reduced till i pay the amount back.
I can only think that the excess from my cash balance pushed me over as i had factored that in.

[freespeech]

Your tax free allowance is reduced by the amount of state pension you receive

As above......pension is just seen as income and nothing changes. The tax code changes because you haven't paid enough tax.

https://www.gov.uk/tax-on-pension

I dealt with my father's finances when he was ill , his tax free allowance on his royal mail pension wage slip was definitely lowered by his state pension amount .

Was his state pension higher than his RM pension? If so I suggest his allowance was used for his state pension. You can’t use the allowance more than once.

From tax aid……. You receive the state pension:
If you receive the state pension, and either work or have a separate occupational or private pension then your tax code will be quite complex. The Department of Work and Pensions do not operate PAYE on the state pension, so no tax will be deducted from your state pension at source – even though it is taxable income.
An estimate of your state pension is deducted from the tax free personal allowance available to your main employment or pension. This leaves less tax free pay available for this source of income.So the employment or occupational pension bears the additional tax due on the state pension.
If you have any other employments or pensions these should be given the BR code in the normal manner. You may need to ask HMRC to explain the code to ensure that it is correct.

[freespeech]

Thanks for replies, I'm not getting my state pension yet as i'm still 65.
My total pay from RM last tax year 22/23 was just over 40,000.
I also got 13 thousand from my RM pensions so my total income was just over 53 thousand.
The HRMC website states i owe them x amount and the tax code is reduced till i pay the amount back.
I can only think that the excess from my cash balance pushed me over as i had factored that in.

In general terms it sounds like you should have paid 40% on around £3k when you probably paid 20%. You would owe around £600. Your coding notice should have explained the actual amount and how it would be recouped.

[P13]

Your tax free allowance is reduced by the amount of state pension you receive

As above......pension is just seen as income and nothing changes. The tax code changes because you haven't paid enough tax.

https://www.gov.uk/tax-on-pension

I dealt with my father's finances when he was ill , his tax free allowance on his royal mail pension wage slip was definitely lowered by his state pension amount .

Was his state pension higher than his RM pension? If so I suggest his allowance was used for his state pension. You can’t use the allowance more than once.

From tax aid……. You receive the state pension:
If you receive the state pension, and either work or have a separate occupational or private pension then your tax code will be quite complex. The Department of Work and Pensions do not operate PAYE on the state pension, so no tax will be deducted from your state pension at source – even though it is taxable income.
An estimate of your state pension is deducted from the tax free personal allowance available to your main employment or pension. This leaves less tax free pay available for this source of income.So the employment or occupational pension bears the additional tax due on the state pension.
If you have any other employments or pensions these should be given the BR code in the normal manner. You may need to ask HMRC to explain the code to ensure that it is correct.

I believe his rm pension was higher, I was surprised by his tax code being low, but I worked out that it looked like they had deducted his state pension from his tax free allowance.