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Pension Tax Code

Practical Issues
mearnsfool
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Pension Tax Code

#216268

Postby mearnsfool » April 19th, 2019, 8:41 pm

Good lady got her first local authority pension payment in Mid March, tax code 0T
Got her second payment mid April, therefore in the 2019 2020 tax year, still tax code 0T.

According to her SIPP provider they also have a tax code of 0T for her in 2019 2020.

Her Personal Tax account for both 2018/2019 and 2019 / 2020 advise that she has reasonable tax codes against these providers and if used she would pay no tax as they are based on reasonable information.

The Personal tax account has had all the details for a few months now.

Is that usual for the personal tax account to have suggested tax codes and the providers not to have the information provided to them even they have advised HMRC of the proposed sums to be paid.

Lootman
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Re: Pension Tax Code

#216269

Postby Lootman » April 19th, 2019, 8:46 pm

I do not have a personal tax account so cannot comment on that directly. However:

1) Aren't pensions normally paid without tax taken out? Surely that is the ideal regardless of whether you end up owing tax or not?

2) Aren't pensions taxed not on the basis of exactly when you receive the payments but rather on a "smoothed" or accrual basis? In other words you just declare your pension as a weekly amount and it doesn't matter when you actually received it. You declare 52 times that weekly amount.

At least that is what my accountant told me as I am also getting my first pension payouts this tax year.

mearnsfool
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Re: Pension Tax Code

#216271

Postby mearnsfool » April 19th, 2019, 8:59 pm

She has a pension from her previous work for the local council.
She has a pension from a SIPP. They should both have a tax code against them.

I believe you are thinking about the state pension which for her is not in payment yet.

Agreed when her state pension comes in to payment it will not attract a specific tax code but it will reduce the total amount of her tax code spread over her two other pensions.

pochisoldi
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Re: Pension Tax Code

#216288

Postby pochisoldi » April 20th, 2019, 12:54 am

mearnsfool wrote:Good lady got her first local authority pension payment in Mid March, tax code 0T
Got her second payment mid April, therefore in the 2019 2020 tax year, still tax code 0T.

According to her SIPP provider they also have a tax code of 0T for her in 2019 2020.

Her Personal Tax account for both 2018/2019 and 2019 / 2020 advise that she has reasonable tax codes against these providers and if used she would pay no tax as they are based on reasonable information.

The Personal tax account has had all the details for a few months now.

Is that usual for the personal tax account to have suggested tax codes and the providers not to have the information provided to them even they have advised HMRC of the proposed sums to be paid.


You need to speak to HMRC to get tax codes sent to each pension provider.

Note that the "optimum" split of the personal allowance into PAYE codes for each pension depends on the nature of the pension, and whether pension income is below/might exceed/definitely will exceed the personal allowance.

"optimum" meaning setting up tax codes to eliminate or reduce any discepancy between what's due and what's deducted.


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