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I am not too sure what the tax code is for the pension. Unfortunately I haven’t received any monthly statement. Both incomes started September 2013
Does that mean I will pay 40% on income over £41,865 before the personal allowance or is the allowance irrelevant.
I have just found my Tax Codes for 2014-15. My Pension is 454L and my employment is BR. Is this correct.When I do the math on both incomes, it appears that I am paying tax on the whole amount
What allowances and deductions are in the 454L code?
The personal allowance is £10000
Adjustment to tax rate band is -£5135
Underpayment restriction is -£316 -£5451
Tax free amount ££4549
Thanks.What they seem to be trying to do is collect the 40% tax due on part of your salary via the tax code being operated against your pension to compensate for the fact that all your salary is being taxed at just 20%. They are also collecting an apparent tax underpayment. I'd call the tax office to find out where the underpayment occurred if for no other reason. The basic rate tax band restriction can work but doesn't always so you should have them look at that too.
Thank you. A little wiser. In your opinion, with the little detail given, am I paying too little or too much tax
If you have an annual income of £47,000 and you deduct the personal allowance of £10,000, you are left with a taxable income of £37,000. The first £31,865 will be taxed at 20% (£6,373.00) and the balance of £5,135 will be taxed at 40% (£2,054.00). The total tax for the year will be £8,427, ignoring the underpayment.Depending on when the codes were first operated, you might be a little underpaid for the current tax year, 2014/15, but you should have the tax office look at the previous tax year, 2013/14, as the tax year where an individual takes a job whilst doing another or already taking a pension is where the problems can start.Always check your tax codes before the start of thje tax year. Call the tax office if you need to for a pre-tax year review and make sure that your employer and the pension payer have the codes you expect them to have.