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Where Taxpayers and Advisers Meet

Tax after retirement

Posts: 1
Joined: Wed May 22, 2019 6:49 pm

Tax after retirement

Postby Flakie » Wed May 22, 2019 6:55 pm

My husband has just taken early retirement from local government. We have had his pension forecast with details of lump sums and also his AVC funds and are waiting for it to be finalised and paid out. Also, part of his pension from LG is a deferred one for which we had to apply separately and are still waiting for the figures for that. He also has a military pension and has, since retirement, applied for and being granted carers allowance for his elderly father. We were told that we didn’t need to do anything about the tax side of things. Is this correct? Is it just a question of waiting for everything to come in and the tax will be calculated automatically, or do we have to inform any of these different organisations? And if that is the case how will any due tax be reclaimed? Very confused about all this after he has worked for over 40 years and it has all been done for him! Thanks.

Posts: 2961
Joined: Wed Aug 06, 2008 4:01 pm

Re: Tax after retirement

Postby robbob » Thu May 23, 2019 8:26 am

We were told that we didn’t need to do anything about the tax side of things. Is this correct?
This is probably a bit simplistic or being more brutal totally misleading advise - practicably speaking most pension payouts are done with an element of tax deducted at source. so to get your pension the pension company doesn't need you to do anything active in that regard to get your cash.

However the basic principle is normally all individuals MUST advise hmrc if they owe extra tax on any taxable income received . So if you have pension payout with 20%/40% tax deducted and you are 45% rate taxpayer the onus is on you to contact hmrc and advise them if you owe extra tax. Note if all income is subject to paye i would expect hmrc to issue an p800/simple assessment calculation here if you don't do anything - this won't happen till months after the end of the tax year though - and they aren't exactly 100% reliable in that regard. So at a minimum do the tax year end calcs to check tax deducted is correct for the tax year as a whole. i am presuming here that there is no added complication of delayed payouts that you would want to argue related to a previous tax year.

Note its more common to be due a rebate than owe tax here so the end result might be quite nice if its a cheque posted through your door - in this regard advance planning to minimise the chances that any "spike in income" will take you into a different tax bracket if this can be avoided is worthwhile.

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