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Tax Codes when you get your pension

04 Aug 2018, 13:28

There were some really interesting information from Beanstout and others about tax codes when you retire.

As its a very important subject I thought it deserved it own thread.

So my question is how have things worked out with people regarding paying tax when they retire.

Is it straight forward, complex, multiple codes for different pension, emergency tax.

Any best practice things to do.

Many thanks


Tax Codes when you get your pension

04 Aug 2018, 18:38

Hawkey99 wrote:There were some really interesting information from Beanstout and others about tax codes when you retire.

As its a very important subject I thought it deserved it own thread.

So my question is how have things worked out with people regarding paying tax when they retire.

Is it straight forward, complex, multiple codes for different pension, emergency tax.

Any best practice things to do.

Many thanks
how can you have multiple tax codes?

Tax Codes when you get your pension

04 Aug 2018, 22:38

arnold cheshire wrote:how can you have multiple tax codes?


If you have 2 (or more) sources of income such as RMPP and RMSPS they are not treated as being from the same source by HMRC but you are allowed to split your tax-free allowance accordingly between these income streams. I have mine split between 3 altogether!

For example suppose you are on a basic TFA (tax free allowance) of £11,850. If your RMSPS is £8,000 gross and your RMPP is £5000 then you ideally want to only pay tax on £1,150. HRMC may attempt to split your TFA between the 2 automatically but may not do it correctly (they did not do it for me initially). One phone call to HMRC will get them to set a tax code of 800 against your RMSPS (so you pay no tax on this at all) and 385 against the RMPP so you therefore get £3850 tax-free with the remainder of £1150 being taxed at 20%.

Tax Codes when you get your pension

04 Aug 2018, 22:50

Thanks Beamish

Tax Codes when you get your pension

05 Aug 2018, 17:59

Hawkey99 wrote:
So my question is how have things worked out with people regarding paying tax when they retire.

Is it straight forward, complex, multiple codes for different pension, emergency tax.

Any best practice things to do.

Many thanks


1. If you haven't already done so create your tax account online via https://www.gov.uk/government/organisations/hm-revenue-customs so that you can see all your employment pay and tax coding allocated to you.

2. If you have a spouse with unused tax allowance then claim married person's allowance https://www.gov.uk/marriage-allowance

3. Check you have the flat-rate expenses allowance included in your total allowances (you can see this in your online tax account). If not then you can claim it for several years back.

4. When you retire, many posties are likely to have at least 3 different 'employments' for the first tax year of your retirement - Income from job, Pension (RMSPS) and Pension (RMPP). HMRC will do their best to allocate your allowances over your different incomes. I had 5 different sources!

5. You can inform HMRC online as to what your estimated incomes (for the year) are for each of your pensions. Difficult to be certain as RM do a 'review' after 12 weeks! Once I got my final figures I updated my estimates as I was now certain the RM pensions were stable and predictable for the rest of this current tax year that is a good phrase to quote to HMRC. It was at this point that you can now make that phone call direct to a human being at HMRC who should allocate the codings correctly to all the different sources of income to minimize any repayments the following year. Leave it 24 hours before checking the online account again to make sure that all changes agreed over the phone have been actioned. I had to ring them the next day because one of my allowances had been stripped of (for some unknown reason) but they are now correct after a second phone call :thumbup

6. Be aware that any lump-sum pension repayments may not be tax-free. I had a small pension pot that I cashed in at the start of this tax year but was clobbered with tax initially as HMRC's software assumes you will receive the same income for the remainder of the year! Also be aware that excess AVC monies will be taxed and paid through your pension. The end of August should see some hefty repayments of tax (bear in mind I retired from RM in early May).

7. Tax allowances allocated at the start of the tax year will remain for the whole year, even though you have left RM in the meantime so the flat-rate clothing allowance (for me) should stay until the start of my next tax year 2019-2010

8. Best time to ring HMRC (0300 200 3300) (if my experience is anything to by) is early morning 0800 - no waiting then but have all your figures itemised and clearly laid out. Know what you want from them and things should work out.

Hope this helps :thumbup

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