RAF Pension and Tax

[Tin basher]

One for the ex mob guys and girls I suppose though any gen would be valued. The tax code for my RAF pension has just gone through the roof from 22.3% to 37.8% yet my salary tax code remains unchanged. Anybody got any clues as to why it's jumped so dramatically other than the obvious tax office screw up?

Cheers TB

 

[Tashy_Man]

Well mine changed this month as well but looking at it i don't think it is wrong. They have put me on tax code BR although i have not declared any new job/tax/PAYE as now working offshore.

Talking to others i may be liable for a little bit of tax this year but should be good for next year, not too sure how this affects my pension tax though.....will get my tax consultant to look into that...once i get around to getting one !!

Crack on.................DT_Xtremez_09:

 

[Killer Queen]

Phone them up remain calm and be prepared to cover each point twice in the event you call no joy, pm me and I will see what help i can give.

DT_Xtremez_28:

 

[Humble Scribe]

TB, I take it this is April's pension which is the first month of the tax year; I suspect it's the amount of tax you are paying on your pension rather than you tax code . It's difficult to try & explain but if you're paid your normal salary first you pay tax at the 20% rate dependant on how much your salary is; if you are then paid pension anything over a certain amount (circa £40K?/year) is taxed at 40% rather than the 20% rate making it look like your paying more tax on your pension but really it's because you've broken into the higher tax bracket.

It sort of works like this. First few thousand pounds you earn (dependant on tax code) tax free, next few grand at 10% (or did until Broon abolished it) then anything up to circa £40K at 22% (now 20%) and the rest at 40%. It's also worked out on a pro rata basis over the 12 months of the tax year so you don't get all the 40% tax in the last few months. In Apr if you get a bonus or pay arrears the taxman thinks you will you will get that amount every month and tax you accordingly. Subsequently as your pay levels out the taxman will realise you've not broken into the higher bracket and not tax you as highly.

Is this your first year out of the RAF? It maybe that you have to pay the higher rate of tax on your pension each month now as you're breached the 40% threshhold. I'm a bit sketchy on the percentages & tax bands but that is my laymans ideas on how the tax system works.

PM me if you're confused!!

 

[Tin basher]

HS - I would dearly love my salary to be in excess of 40K but it's nowhere near even + my pension. I have been out for a few years now and it's the first time anything odd has happened. I understand the sliding tax scale on earnings, from a laymans perspective, it just seems weird that the rate my pension is taxed at has now changed to mirror the 40K threshold level. I reckon it might be a default position by the tax man because of a glitch somewhere.

KQ - Thanks for the offer, if I get no joy I shall send the PM.

 

[busby1971]

Gordons been messing

Gordons been messing

As well as getting rid of the 10% rate, which you may have heard about, Good old Gordie brune also "Harmonised" the National Insurance rate to match the higher rate of tax, is you are earning say mid to high 30s then this could have hit you and pushed up your contributions.

There used to be a gap where you reached the NI ceiling but not quite a high tax payer.

Taxation Taxation Taxation

 

[Tony The Tiger]

Pension and tax

Pension and tax

I dont pay Tax on my Pension at all

I havent done since 2003 when I was laid up with a bad back.
After consulting Taff @ Ty Glas They offset some of my tax code against my pension and the rest is used for Income.

It works fine for me.

 

[taxydual]

I don't pay any tax on mine either.

How it was explained to me was that my pension is my MAIN source of income (seeing as it will last for the rest of my life) whereas my SECONDARY source of income (my full-time civvy job) may come and go as the job may come and go.

At the moment, because my pension is below my personal allowance, I get 100% tax free and the remainder of my allowance gets carried over to my salary from my civvy job (which gets whacked.)

Swings and roundabouts really. The big snag will be next year (I'll be 55) and the full monty pension kicks in. Then I'll be B*******D I'll bet.

 

[justintime129]

I don't pay any tax on mine either.

How it was explained to me was that my pension is my MAIN source of income (seeing as it will last for the rest of my life) whereas my SECONDARY source of income (my full-time civvy job) may come and go as the job may come and go.

At the moment, because my pension is below my personal allowance, I get 100% tax free and the remainder of my allowance gets carried over to my salary from my civvy job (which gets whacked.)

Swings and roundabouts really. The big snag will be next year (I'll be 55) and the full monty pension kicks in. Then I'll be B*******D I'll bet.

Got the same information as well. At least I know I'm getting the same amount every month.