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bigduckontax, Accountant
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I have a teacher's pension of £9,630.91 and a local govt pension

Customer Question

I have a teacher's pension of £9,630.91 and a local govt pension of £1,790.40 giving a total of £11,421.30 altogether. This is £821.30 over the £10,600 personal allowance. Which pension will be taxed and can you advise how much tax will be taken?
Many thanks,
Janet
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Janet, I'm Keith and happy to help you with your question.
The normal procedure would be for HMRC to issue a normal tax coding against the teacher's pension. Of course that would result in no tax being deducted at all. the Local Government pension would almost certainly receive a tax code from a different HMRC office and deductions at 20% made. When you receive the tax coding for the Local Government one, if it is a 0T code or similar you should write to them to ask for your code to be amended to take account of the 969 quid of tax allowance not relieved.
You should always check tax codes whenever they are notified to preclude nasty shocks at the year end should some of them have been wrong. This is even more important when your State Pension kicks in as this is taxable income, but paid gross. This would normally be taken into account against the larger pension making a substantial reduction in the code number. HMRC frequently make mistakes here. On one occasion I challenged the position and after five letters HMRC admitted that they were basing their figures on a basic State Pension totally oblivious of GPC, State Secondary Pension and its follow on system despite having been repeatedly advised of the actual position. Moral, watch out.
I compute your tax liability to be 11421 - 10600 = say 820 @ 20% = 164 or a tad under 14 quid a month.
I do hope I have shed some light on your situation for you.
Customer: replied 1 year ago.

Hello Keith, Many thanks for your prompt reply. Does this mean that until I qualify for my State Pension (in January 2016) that the £164 tax would be taken off my Teacher's pension payments and not the local govt. pension payments?

Also, I have been offered a part time position as a Teaching Assistant from this June until January which would pay £3,000 gross in total. Is it worth taking this job or would it just incur a hefty liability (how much?) and, would this tax be taken from my wages or from my Teacher's pension??? I'm in a bit of a muddle and would appreciate it if you could shed any light on the situation for me.

I look forward to hearing back from you. Thanks again, Janet

Expert:  bigduckontax replied 1 year ago.
There is a danger Janet that unless you cross check the code numbers, there will be a discrepancy unless the 164 is adjusted through the lower pension. It is back to checking code numbers again.
I am a great believer in the adage that if you are being taxed you must be receiving income! If you take on the Teaching assistant job on you would pay some GBP 567 in tax, a net income of some 200 quid a month
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bigduckontax, Accountant
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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