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Where Taxpayers and Advisers Meet

Logic Query re Taxatuon of Pension Income

Claudius
Posts: 7
Joined: Wed Aug 06, 2008 3:26 pm

Logic Query re Taxatuon of Pension Income

Postby Claudius » Fri May 24, 2019 2:11 pm

How is it that the state pension is always paid gross without any reference to ones tax situation, but the same doesn't seem to apply to pension income paid via an established annuity?
I am told the annuity provider will tax at source, or may just contact HMRC to learn my tax code.
Would it make a difference if I were not currently a tax payer but would become one, with the receipt of a pension annuity per se?
Thank you

robbob
Posts: 2811
Joined: Wed Aug 06, 2008 4:01 pm

Re: Logic Query re Taxatuon of Pension Income

Postby robbob » Fri May 24, 2019 2:54 pm

How is it that the state pension is always paid gross without any reference to ones tax situation, but the same doesn't seem to apply to pension income paid via an established annuity?
In a nutshell it sums up the government and hmrc stance on things - they treat themselves to different standards than the standards they impose on others - very annoying but good luck in ever convincing hmrc or the government to change anything ever just because it makes no sense or is wasteful.
Would it make a difference if I were not currently a tax payer but would become one, with the receipt of a pension annuity per se?
Yes - it does make a difference - basically the correct amount of pension income needs to show up on the coding notice sent to the annuity provider or there is a chance too much or too little tax will be deducted.Note it might work automatically and you might be lucky. In theory hmrc do an after year end calculations if things are more than a few quid out - but better doing the maths and checking that overall you think the right amount of tax is being deducted. once you get to tax year 2 things will be less prone to being wrong.

final note make sure you have applied for marriage allowance transfer if that's an option and if that will save tax - eg spouse to you if spouse pays no tax

apologies this post is a bit garbled and messy

Claudius
Posts: 7
Joined: Wed Aug 06, 2008 3:26 pm

Re: Logic Query re Taxatuon of Pension Income

Postby Claudius » Sat May 25, 2019 10:31 am

Thank you robbob


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