Tax Code Lowered

[freespeech]

Your tax free allowance is reduced by the amount of state pension you receive

As above......pension is just seen as income and nothing changes. The tax code changes because you haven't paid enough tax.

https://www.gov.uk/tax-on-pension

I dealt with my father's finances when he was ill , his tax free allowance on his royal mail pension wage slip was definitely lowered by his state pension amount .

Was his state pension higher than his RM pension? If so I suggest his allowance was used for his state pension. You can’t use the allowance more than once.

From tax aid……. You receive the state pension:
If you receive the state pension, and either work or have a separate occupational or private pension then your tax code will be quite complex. The Department of Work and Pensions do not operate PAYE on the state pension, so no tax will be deducted from your state pension at source – even though it is taxable income.
An estimate of your state pension is deducted from the tax free personal allowance available to your main employment or pension. This leaves less tax free pay available for this source of income.So the employment or occupational pension bears the additional tax due on the state pension.
If you have any other employments or pensions these should be given the BR code in the normal manner. You may need to ask HMRC to explain the code to ensure that it is correct.

I believe his rm pension was higher, I was surprised by his tax code being low, but I worked out that it looked like they had deducted his state pension from his tax free allowance.

Yes, as per the article the state pension is not PAYE so the tax due on that is deducted from the allowance on other incomes…..in this case the pension. It could be another income it just so happens it’s a pension. It isn’t the pension in itself that impacts the personal allowance.