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Tax on Occupational Pension
12 Answers
Why does one pay tax on occupational pension.
My friend gets £145.00 OP,out of which £29 is took in tax...this is hardly fair when she has paid her tax when paying into it.
Anyone know the ins and outs of this???
My friend gets £145.00 OP,out of which £29 is took in tax...this is hardly fair when she has paid her tax when paying into it.
Anyone know the ins and outs of this???
Answers
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I pay tax on mine but the state pension is included in the assessment. It is more convenient to take the whole of the tax from the occupational pension which is paid (usually) once a month than it is to take from the state pension. I do it with ill grace and great resentment, but it is one thing you cannot escape. Can't remember who said it but there are two things you cannot escape, death and taxes, although judging by recent news some of the richer people seem to find ways not to pay. If I could think of a way, believe me, I would.
She should have a personal tax allowance (which if she is over 65 will be quite high) so I'm not sure why she pays the full 20% tax rate on all her OP. It can only be that she has another source of income.
I'm sure that if it was a retired 'fat cat' earning £50,000 a year from a pension we wouldn't be arguing they should get it tax free instead of having it taxed at up to 40%.
I'm sure that if it was a retired 'fat cat' earning £50,000 a year from a pension we wouldn't be arguing they should get it tax free instead of having it taxed at up to 40%.
It is possible a temporary code is being used, what used to be BR, which taxes the "emoluments" at basic rate, currently 20%.
£145 per month is only £1740 p.a., and state pension is likely to be £6000 or less, so that unless he/she has another source of income, there should be no tax to pay. They should check with the tax office dealing with the pension, which should be on a payslip, or can easily be requested of the pension payer.
£145 per month is only £1740 p.a., and state pension is likely to be £6000 or less, so that unless he/she has another source of income, there should be no tax to pay. They should check with the tax office dealing with the pension, which should be on a payslip, or can easily be requested of the pension payer.
Oops! Hit "Submit" button too soon ( lurking beneath keyboard).
It may be that the pension payments concerned relate to last year, and there will be almost a full year's earnings to consider when calculating total income, and in the current year the tax deductions will cease if a proper code is in operation.
It may be that the pension payments concerned relate to last year, and there will be almost a full year's earnings to consider when calculating total income, and in the current year the tax deductions will cease if a proper code is in operation.
I get taxed on my paltry works pension as my state pension uses up most of the personal allowance. But the really really kind little taxman took pity on me this week and sent me a prezzie - a TAX REFUND!! Never been known before - was my lucky day :) so just paid £91 into my bank ..........ta very much! :))
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