The HMRC letter states ' Your new tax code for the year from 6 April 2014 to 5 April is 156L which replaces 1015L' There is no M1 or W1 mentioned.
Hi again.It would appear that the tax office has included your state pension of £6,932 and your private pension of £3,487 part of them at least if they have only just started in the current tax year in your tax code of 156L as those two pensions are paid without deduction of tax at source. I cannot quite get to allowances of £1,560 so you need to check your copy of the tax code or with the tax office on the number here to find out exactly what deductions are in it. If the two pensions mentioned have only just started, then the amount you will receive from each in 2014/15 will not quite equate to a full tax year's worth.Given that there appears to be no M1 or W1 at the end of your tax code, it will effectively be backdated to 6 April 2013 so the tax deduction for May or the month when it is first used will be more than had it been used from the start of the tax year. In a regular month, you will pay tax of about £434.83. Use the calculator here to check your tax when your tax code changes.If you salary does not increase in 20148/15, you will be a basic rate taxpayer so the code on your pension of £720 per annum should be BR, not D0.If you salary was £3,315 per month, in a full tax year on a code of 156L, you would pay tax of £742.62 per month. The tax code on the small pension would need to be D0 as you would be a 40% taxpayer. I hope this helps but let me know if you have any further questions.
Many thanks Tony. I now currently put 10% of my gross salary into an ongoing pension pot. What would be the tax be on £3315 per month figure if I were to put into the pension pot 20%
Is your pension contribution paid through the payroll, ie is it shown as a deduction from your pay on your payslip or do you pay it from your own bank account to a private pension scheme?
Paid through the payroll.
Thanks.If you contributed 20% of a £3,315 per month salary via the payroll into your pension, you would pay tax of about £504 per month. Most pension contributions paid through the payroll are given tax relief at the top rate of tax paid by the employee but some payrolls restrict it to 20% so any higher rate tax relief has to be claimed via the tax code or at the end of the tax year via a tax return. You should check that out.
Many thanks Tony
Rating - 'EXCELLENT'