Tax Codes and Retirement

[Narcisus]

Hi guys I'm new to this so help appreciated.

I retired in Feb with a small pension of less than 6k which was taxed at source while I was working @ 20%

I had used my tax allowance for 2024 during work but expected my monthly Pension to increase by 20% for April and onwards.

Just signed up for the HMRC portal and it's saying my estimated income is <6k and tax estimate is £0 with the tax code 1248L for the Pension 6th April 25 to 5th April 36.

On the HMRC Portal it's showing that I've paid 20% income tax on this months Pension.

I've spoken to the Pension people and they say nothing we can do we just act on what HMRC tell us.

So is that tax code correct and is it just a case of HMRC have not spoken to my Pension provider yet or do I have to do something ?

Will I be able to claim this months and any further months tax back or will I have to wait until the next tax year ?

Thanks and I hope that makes sense to someone !!

[Abc321]

Narcisus said:

I retired in Feb with a small pension of less than 6k which was taxed at source while I was working @ 20%

I had used my tax allowance for 2024 during work but expected my monthly Pension to increase by 20% for April and onwards.

Just signed up for the HMRC portal and it's saying my estimated income is <6k and tax estimate is £0 with the tax code 1248L for the Pension 6th April 25 to 5th April 36.

On the HMRC Portal it's showing that I've paid 20% income tax on this months Pension.

I've spoken to the Pension people and they say nothing we can do we just act on what HMRC tell us.

So is that tax code correct and is it just a case of HMRC have not spoken to my Pension provider yet or do I have to do something ?

Will I be able to claim this months and any further months tax back or will I have to wait until the next tax year ?

Code 1248L means £12,480 tax free so essentially your normal tax-free allowance.

The Pension people are correct in saying they are just doing what HMRC tell them.

If you have no other income, HMRC will have likely issued you a new tax code this morning. Which your pension people will receive and you will get that 20% refunded in your next 'pay packet'.

[Narcisus]

Abc321 said:

Narcisus said:

I retired in Feb with a small pension of less than 6k which was taxed at source while I was working @ 20%

I had used my tax allowance for 2024 during work but expected my monthly Pension to increase by 20% for April and onwards.

Just signed up for the HMRC portal and it's saying my estimated income is <6k and tax estimate is £0 with the tax code 1248L for the Pension 6th April 25 to 5th April 36.

On the HMRC Portal it's showing that I've paid 20% income tax on this months Pension.

I've spoken to the Pension people and they say nothing we can do we just act on what HMRC tell us.

So is that tax code correct and is it just a case of HMRC have not spoken to my Pension provider yet or do I have to do something ?

Will I be able to claim this months and any further months tax back or will I have to wait until the next tax year ?

Code 1248L means £12,480 tax free so essentially your normal tax-free allowance.

The Pension people are correct in saying they are just doing what HMRC tell them.

If you have no other income, HMRC will have likely issued you a new tax code this morning. Which your pension people will receive and you will get that 20% refunded in your next 'pay packet'.

Thanks for the quick reply ! I'm not sure when that code was issued I suppose it could have been in February or the start of the new tax year I've only just signed up to check.

So the Pension People will refund even though it has already been paid to HMRC ?

Cheers !

[Eric Mc]

That's how PAYE works. When codes get changed part way through a tax year, the PAYE calculations to date "self correct" and, if you had been overpaying tax based on an earlier code, the tax will be automatically "refunded" to you when the replacement code starts kicking in.

That's the theory anyway.

[Narcisus]

Eric Mc said:

That's how PAYE works. When codes get changed part way through a tax year, the PAYE calculations to date "self correct" and, if you had been overpaying tax based on an earlier code, the tax will be automatically "refunded" to you when the replacement code starts kicking in.

That's the theory anyway.

Gotcha thanks Eric I'll just keep an eye on it then put the bill in the post !

[Narcisus]

Just to close this spoken to the pension guys and they confirm they have just received the new code from HMRC and things will start to sort themselves out from next month.

Cheers !