Pension calculator

[wally375]

Below is a quote from the JPA Pension calculator. It's been mentioning changes in tax on pensions for ages and it also clarification is being sought.


'Note: The calculator uses the current AFPS 75 rules on calculating resettlement commutation. Policy is in consultation with the Revenue as to whether the 6 April 2006 change in tax on pensions will affect the calculation. The calculator will be updated once clarification is received.'


How long will this 'clarification' take? Anyone know?
I asked JPAC for an updateed forecast and got the same numbers from the last calculation!!!

 

[Get Tae]

Wally is quite easy to understand the tax on pensions.

They lump your pension and wages together and tax the lot at 20%.

You will lose your entitlement to any tax free wage i.e. your tax code will change to BR instead of say 4850L or whatever.

Be prepared to be dry humped on tax I'm afraid.DT_Xtremez_21:

 

[4everAD]

Wally is quite easy to understand the tax on pensions.

They lump your pension and wages together and tax the lot at 20%.

You will lose your entitlement to any tax free wage i.e. your tax code will change to BR instead of say 4850L or whatever.

Be prepared to be dry humped on tax I'm afraid.DT_Xtremez_21:

You still get your tax allowance it's just all used on your main income (Assuming you're working and receiving your MOD Pension) so when your pension is looked at it is all taxed at 20% as there is no allowance left.

 

[Stevienics]

Anyone any ideas why the tax on my pension leapt from 20% in March to 40% ever since?

 

[justintime129]

Anyone any ideas why the tax on my pension leapt from 20% in March to 40% ever since?

Maybe with your pension and job added together the total as taken you into the 40% tax bracket which is just over £37000. So you'd have your allowance of £6475, pay 20% on earnings from £6476 to £37400 and then 40% on 37401 and above.

I use my allowance on my pension and have have a few hundred left over to use against for my job, the only downside is I have to contact the tax every year if personal allowance goes up so the can alter my tax code for the job. It's always a bummer when I open my payslip every month and see how much tax I've paid.

 

[mememe]

will I get it tax free if I move abroad (Aus or NZ) at the end of my time?

 

[justintime129]

will I get it tax free if I move abroad (Aus or NZ) at the end of my time?

According to the directgov website you'll pay tax on it in Oz or NZ..

They get you every way.

 

[FOMz]

So is your lump sum taxed? What if you use maximum commutation?

Also, what rate is you pension taxed at if you don't go over the £37000 income bracket?

 

[Stevienics]

Maybe with your pension and job added together the total as taken you into the 40% tax bracket which is just over £37000. So you'd have your allowance of £6475, pay 20% on earnings from £6476 to £37400 and then 40% on 37401 and above.

I use my allowance on my pension and have have a few hundred left over to use against for my job, the only downside is I have to contact the tax every year if personal allowance goes up so the can alter my tax code for the job. It's always a bummer when I open my payslip every month and see how much tax I've paid.

My understanding was that the pension was taxed at 20% flat whatever the other job salary is, and which I have to say is quite a bit more than thet 37K limit, and has been for some 3 years since I tok the job. Thesea re wehere the adjustments should be made. I have written to them as something has gone awry in the last 3 months.

 

[justintime129]

My understanding was that the pension was taxed at 20% flat whatever the other job salary is, and which I have to say is quite a bit more than thet 37K limit, and has been for some 3 years since I tok the job. Thesea re wehere the adjustments should be made. I have written to them as something has gone awry in the last 3 months.

Something has gone wrong. Are you paying less tax on your job or roughly the same.. I got told by a tax office official to use my allowance against my pension in case I change jobs/lost job then at least I'd be getting a regular income. I'm 55 next may so pension goes up so less allowances against my job, so more tax to be paid.

I get a pension from when I worked at asda of £100 a quarter the taxman takes £20 of that. I didn't tell him but he's caught up with me and taken the money I owe him from this quarters. There's no escaping him.

 

[justintime129]

So is your lump sum taxed? What if you use maximum commutation?

Also, what rate is you pension taxed at if you don't go over the £37000 income bracket?

You get an allowance of £6475 then from £6476 to £37400 is taxed at 20% so I suppose it's up to you how you use your allowance. Do you use it against your pension knowing you'll be getting a regular income every month or do you use it for your job and get your pension taxed at 20%. as I've said previously I've taken my allowances against my pension and the remainder (for what it's worth) against my job. My rationale was if I lost my job at least I knew I'd be getting my pension tax free and wouldn't haven't to claim back the tax.

 

[FOMz]

Ignore me - I'm thick.

I've just found THIS Much easier to understand than HMRC's websh1te. DT_Xtremez_14:

Phew!

 

[busby1971]

Don't forget about your tax free income

Don't forget about your tax free income

It's a bit nicer than that (these figures are made up but are not far off).

You get about £6,500 tax free (0 to 6,500)

The next £37,000ish gets taxed at 20%. (6,500 - 43,500)

The next bit up to mega pay is 40% (43,500 - Mega pay)

Once you are in the mega pay band or getting close, it is cheaper to pay an accountant to sort out your money rather than pay the tax man. so you will probably pay less tax than your cleaner.

Don't forget the high rate taxed income doesn't pay NI so the extra is only 9% in real life.

The good news

You don't pay NI on your pension.

You don't pay tax on your lump sum or commutation.

 

[Stevienics]

Maybe with your pension and job added together the total as taken you into the 40% tax bracket which is just over £37000. So you'd have your allowance of £6475, pay 20% on earnings from £6476 to £37400 and then 40% on 37401 and above.

I use my allowance on my pension and have have a few hundred left over to use against for my job, the only downside is I have to contact the tax every year if personal allowance goes up so the can alter my tax code for the job. It's always a bummer when I open my payslip every month and see how much tax I've paid.

Just so you know, I did the sums this weekend and you were nearly dead right: The level at which higher rate tax kicks in reduced by £1,500 to £42,375 in April, which substantially affects upwards the tax I pay and all of which was adjusted on the Pension, rather than my main income.

Read more: http://www.thisismoney.co.uk/tax/ar...e_id=11&position=moretopstories#ixzz0vR6oaP2i

I am not sure how they differentiate low and middle income earners such that the get 7,475 free before the start paying tax, but I appear to be subsidising those who didn't pay attention at school.

 

[needsabiggerfuse]

This site is quite good. Select 'Take home', bang in your gross, press 'Go' and weep. DT_Xtremez_42:

http://www.thesalarycalculator.co.uk/

 

[mick-a-nick]

Fuse, Do you supply tissues?DT_Xtremez_42:

 

[needsabiggerfuse]

Fuse, Do you supply tissues?DT_Xtremez_42:

"There, there, nasty taxman took it all away". Dab - dab - dab. "Now blow ... feel better?"

 

[Ex-Splitter and Proud]

"There, there, ....took it all away". Dab - dab - dab. "Now blow ... feel better?"

Before joining the RAF, or since leaving, were you a priest, Fuse?

DT_Xtremez_42:

 

[needsabiggerfuse]

Before joining the RAF, or since leaving, were you a priest, Fuse?

DT_Xtremez_42:

No, but what heinous crime would you like to confess? DT_Xtremez_30:

 

[mememe]

If you leave and move abroad, is the pension taxed in UK or overseas, thinking Australia or New Z.