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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4932
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am about to retire in June aged 68. I currently pay 40% tax

Resolved Question:

I am about to retire in June aged 68. I currently pay 40% tax on my salary , which will cease and 40% tax on 4current pensions that started when i reached 60.
How do i consoliodate all my pensions, including the state pension which i will start in June onto a tax code that represents their overall value of around £40k before tax.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

The Office would allocate your tax allowance against one of the pensions you receive (maybe the one giving you the highest pension). This tax code will take into account state pension received by you, as although state pension is taxable but you receive it gross in your hands.

You will have to inform the Tax Office of your change of circumstances after you retire in Jun 2015 and they will do the rest because their records would show your pension providers. You don't have to contact each and every pension provider.

Lets consider this scenario as an example....

For next tax year
Personal allowance =£11,500
State pension =£8,000
Pension 1 =£12,000
Pension 2 to 4 =£20,000

Pension 1 provider would be asked to apply tax code 350L (11,500-8,000= 3,500)
This takes care of your personal allowance
Pension providers 2 to 4 would be required to apply tax code BR (all earnings to be taxed at basic rate)

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Thankyou. As my state pension will be enhanced to £9028 and my biggest pension will be less than £12000 pa, I assume that from your scenairo that any balance would be deducted from another pension. Therefore pension 1 would be tax free and pension 2 would have deucted the balance and then all taxed at basic rate.

Expert:  taxadvisor.uk replied 2 years ago.
Colin, thank you for your reply.

You will be receiving the enhanced pension paid to you gross and it would account for £9,028 of your personal allowance out of a total of £11,500 (as taken in my scenario).

Pension 1 would be (11,500-9,028) 2,472 tax free (pension provider required to apply tax code 247L) and the rest will be taxed at basic rate along with pensions 2 to 4.

I hope this clarifies the position and is helpful and answers your question.


taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4932
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and 4 other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes

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