Newly retired and on 40% tax now.

[cm.williams]

I finished in September and received a letter from HM Revenue and Customs stating the same (dated 22/9/15) and subsequently got a copy of a form the Pension authority sends to the tax man giving my salary and tax paid so far this year....dated 23/9/15. I think it is just lack of providing information early enough and the tax man thinks your pension is as well as a salary so is taxing it at the higher rate.

[bill.advanced]

I finished in September and received a letter from HM Revenue and Customs stating the same (dated 22/9/15) and subsequently got a copy of a form the Pension authority sends to the tax man giving my salary and tax paid so far this year....dated 23/9/15. I think it is just lack of providing information early enough and the tax man thinks your pension is as well as a salary so is taxing it at the higher rate.

I suggest you read post 5 by nighstsffer and go to the website, then read sections 4 and 5.

[noisycat]

I would ring your brigade pension dept. before you ring the tax people and see if they can solve your problem. The reason I suggest this is that the average time waiting on the phone to get through to HRMC is about 45 minutes with no guarantee of you actually getting to speak to someone.

[cm.williams]

I suggest you read post 5 by nighstsffer and go to the website, then read sections 4 and 5.

I am perfectly aware of the tax implications of commuting more than 25% of your pension pot ( which I choose not to do), I was just suggesting that as you do not receive a P45 from your Brigade when you retire, revenue and customs assume that you are still being paid a salary and therefore until the pensions authority provide the appropriate paperwork your pension will be taxed at the higher rate.

[bill.advanced]

I am perfectly aware of the tax implications of commuting more than 25% of your pension pot ( which I choose not to do), I was just suggesting that as you do not receive a P45 from your Brigade when you retire, revenue and customs assume that you are still being paid a salary and therefore until the pensions authority provide the appropriate paperwork your pension will be taxed at the higher rate.

Hi cm possibly Voxx is not aware, or you may be correct in what you say.
I reckon with all the advice he has had on here he will sort things out.
Cheers.

[voxx]

I have a P45 which says I've earned £13,304 to date of retirement. My pension letter says I paid tax on £7,881 of my lump sum ( I commuted the full 25%).

Not sure if I'm assuming correctly but that only comes to £21,185. Well shy of the 40% tax band.

Going to give Tax Office a call tomorrow.

[bill.advanced]

I have a P45 which says I've earned £13,304 to date of retirement. My pension letter says I paid tax on £7,881 of my lump sum ( I commuted the full 25%).

Not sure if I'm assuming correctly but that only comes to £21,185. Well shy of the 40% tax band.

Going to give Tax Office a call tomorrow.

Voxx, read post 5 posted by nighstsffer in particular the link on that post.
As you commuted the full 25% it looks like you strayed over 25% of your pension pot by the £7,881 meaning that you will have to pay tax at 40% on that portion (£3152)
It does not matter what other earnings you received the rate of tax applied is 40% regardless. You should have been informed about this change in tax from 2010-11.

[Benito M]

I can confirm what bill is saying is right. I was given two amounts of commutation by my pension provider. The first was around 99k with no tax and kept me inside the 25% of my pension pot and the second was 106k where I had a 3k tax bill so got 103 k.
So I did the maths of taking the extra and how long I would have to draw pension to recoup that and then decided.
But the main reason I took the later and paid the tax is that also hit my employer with their tax bill as a parting gift from me to them and that is why they try to discourage you from taking the full amount.
Don't get me wrong, take the financial advice. Ask the pension administrator for your sums both tax free and with tax and then decide.
But to get one over on them one last time it was 3k well spent

[bill.advanced]

I can confirm what bill is saying is right. I was given two amounts of commutation by my pension provider. The first was around 99k with no tax and kept me inside the 25% of my pension pot and the second was 106k where I had a 3k tax bill so got 103 k.

Give the credit were it is due benito, Ns kept me in the right path there.
Anyway mate, buddy, good friend, any chance of a loan.
Seriously benito thanks for being so candid, breath of fresh air.

[josephine]

Money deserves respect.
The less you have the greater the respect should be.
At the moment I have the greatest respect for it.