Why am I still being taxed 20% on my pension?

31 Jan 2017, 08:32

I took my RM pension 5 years ago but continued to work. so obviously with a salary coming in my pension was fully taxable at 20% £615 a month with £123 deduction.
However at Christmas I retired. I assumed RM would inform HMRC of my departure and amendments would be made.
over night tonight £492 went into my bank. I`m astounded they are still taxing me fully on this.

Obviously I`ve never been retired before so I have no idea of the procedure. maybe somebody on here as done the same thing as me and give me a heads up on this? becuase sure as hell I am puzzled.

Why am I still being taxed 20% on my pension?

31 Jan 2017, 09:51

The Personal Tax Allowance is currently £11,000 per year & is due to increase to £11,500 in April 2017. Therefore the first £11k you earn in the current financial year is tax free and everything afterwards is taxable. I would imagine that with around 9 months of wages and pension, you would have already hit that limit.

However HMRC often assume you’ll be paid a similar amount for the whole year(wages & pension). So you might find that if you continue to pay the same amount of tax until 5th April, a small refund might be coming your way? If after the new tax year starts your income is below the PTA, you shouldn’t be paying any tax at all. But bear in mind that any wages, pension/s and state pension you have coming in will all count as income.

That’s how I understand it, but someone with personal experience might be along in due course.

Or you could always get in touch with HMRC and see what they have to say.

Why am I still being taxed 20% on my pension?

31 Jan 2017, 10:58

Been in touch with HMRC this morning, tax code amended, all well and good now, already paid my full tax for this year, so waiting for a rebate in the new tax year.

Why am I still being taxed 20% on my pension?

04 Feb 2017, 17:21

I got voluntary redundancy in May 2015, i am 63yo so been getting RM pension since 60yo, for the first year i was paying 20% tax on this and the following September had a tax refund of over 1800 pounds, i then informed the HMRC that i was now retired from Royal Mail so then they informed RM pensions, and had another rebate to cover the tax i had paid from April-September in the financial year, so you will get a tax rebate for the tax year but you can get a refund sooner by getting in contact with the HMRC unfortunately Royal Mail don't do this.

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