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Sam
Sam, Accountant
Category: Tax
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I am considering retiring early at age 52. I have worked for

Customer Question

I am considering retiring early at age 52. I have worked for 35 years and have paid tax and national insurance conts throughout. My pension after actuarial reduction will be £8500 a year. Am I correct in assuming that (a) under current rules I will pay no income tax and that (b) I will not have to pay any national insurance conts (unless I take unpaid employment again). I live in England.
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi
Thanks for your question
There certainly will be no National Insurance against a pension payment and of your total income for the year remains less then £10600 then there will be no tax either.
And yes this would need to be reviewed should you take up employment or your income position changes again.
Thanks
Let me know if you require any furtehr assistance
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks for this. So if I retire in May how will the £10,600 be calculated? My earnings (on which I will pay tax) until I retire in May is £24000 a year. So if I retire in May and my pension is £8500 will I pay any tax from May (when the pension starts)?
Expert:  Sam replied 1 year ago.
Hi
Thanks for your furtehr question which really should be listed as a new question as per Just Answer policy, but as this is your first time on Just Answer I shall answer this further question within this same thread
You will be issued with a P45 which will reflect 2/12s of salary (you do not indicate whether there will be any retirement pay) and also tax suffered
You then hand that P45 to the pension provider - they will see that Month 3 onward your level of income is les than the monthly personal allowance and this will then create a tax refund each month of tax already suffered so that
1) You do not suffer tax on the pension payment as its below the monthly threshold and
2) the pension payer can take into account that as each total income position accumulates from the forthcoming months - that any tax suffered in Month 1 and 2 can be refunded to you.
If there is any issue with getting the P45 from your current employer - then ask the pension payer for the P46 (or equivalent as they are no longer used as such) - initially this will enable the pension payer to pay your pension WITHOUT any deduction of tax but until such time HMRC are informed and able to issue the previous pay and tax details to the pension payer - will any refund be possible.
Let me know if you require any further assistance - but it would be appreciated if you could rate the level of service provided (or click accept) as Just Answer can then credit me for my time
Thanks
Sam
Customer: replied 1 year ago.
Thank you.
Expert:  Sam replied 1 year ago.
You are very welcome
Thanks
Sam

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