Tax on pension

[horselady]

My husband has just retired and has a state pension of £10,764 and a company pension of £4,962 so £15,726 altogether. He has been given a tax code of K134. In simple terms, how much tax will he pay?

[craft1948]

Have you got those the right way round?

[factor-fiction]

http://www.moneysavin...t.com/tax-calculator/
This should help

[craft1948]

Anyway he'll pay £1884. tax

[factor-fiction]

I think they are the wrong way round. The state pension is probably £4692. Because tax due is based on total income and the state pension is paid without tax deducted, the personal allowance is reduced by £4692. This would give a tax code of 134. So he doesn't pay tax on the first £1340. He then pays 20% tax on the remainder of approx £14386- that's about £2877 pa

[factor-fiction]

sorry ignore that- he'll pay tax on 15626 less the personal allowance. So tax will be about £1880 pa.
The tax code of 134 is a red herring really- the basic tax code is what matters

[craft1948]

No his tax code will be around 6475 so his state pension of £4962 is deducted from the allowance and the balance of £1340 is offset against his private pension only. So he will have £10764 - £1340 = £9424 which taxed at 20% is £1884.

[craft1948]

agreed factor :-)

[horselady]

His state pension is £207 per week (basic together with what is called the additional pension) so £10,764 per year

[dzug2]

He must be 65 if he's getting the state pension

Therefore he will get age allowance - £9490 - rather than the standard personal allowance

That means his tax will be roughly £1250

A K code indicate a negative tax code - and is used to collect the tax on his state pension through the private pension

[horselady]

Yes, he was 65 in January. Thank you for your help everyone.