Can I stop tax being deducted from my pension income?

[BrightSundowner]

Hi, newbie here! I was told by a friend that people on mumsnet might know the answer to my situation.

I've just been able to retire at 60, due to recent ill health, with a private pension from an earlier job. I'd done all the calculations and I have enough to live on until my state pension and my other private pension kick in.

However, what I didn't expect is that my pension is being paid to me with 20% deducted before I get it. I have no other income source so shouldn't be paying tax as the pension is around 12k pa

I know that I can claim a rebate next April and I'd be OK from then on, but is there anything I can do in the meantime? I've rung HMRC several times and always been cut off before I get through to anyone.

Please don't suggest claiming PIP (I wouldn't be eligible) or claiming universal credit, I just want my own money.

Have you given your pension provider your Tax Code? They might be using an ‘emergency “code. I have contacted HMRC previously and asked them to check my tax code, and advised that I had retired. Once you get through, I have found them very helpful.

Hi, the only tax code that I have is 1257L which is why 20% is being taken off, I think

Do you know the best time to ring HMRC as I've tried but can't get through?

@BrightSundowner first thing in the morning is the best time. Can't remember if they open at eight or nine.

that doesn’t sound right?
1257L Is the standard tax code that should mean you’re only paying tax on amounts over the £12570 annual allowance

It sounds like you have the emergency tax code BR Which would be a flat 20% on all income?
PP’s are right, Best thing to do is call HMRC

Try 8am.

Did you take a lump sum?

it does sound like the pension provider has no code - often happens on first withdrawals/drawdown - and so an emergency tax has been applied.

if you get the correct code to the pension provider then any overpaid tax will automatically get refunded in your next month’s pension. As codes apply cumulatively across the tax year.

You could also call your pension provider to check which tax code they are applying When they process your pension - If they haven’t received any notice that you are on 1257L, they may have applied the BR code instead. If you have the tax code not notification, you might need to send it to them

Set up a government gateway account and use it to inform HMRC that your pension is now your only source of income and you no longer work.

Did you get a P45 when you stopped working?

Get access to your personal tax account via the HMRC website. You can confirm there that this is your only income to get your tax code changed. You should the effectively get an in year refund.

Many thanks to you all - I have a government gateway account from a few years ago but I've not needed to use it so didn't even think of using that!

No, I didn't take a lump sum, I have a P45 but it coincided with the end of the tax year so all the money this year has been the pension.

I'll try calling at 8am then using the government gateway if that doesn't work

Thanks again, all of you

Just post on the government gateway account, they can update your pension provider with the correct tax code, you will get the adjustment in year.

Certainly provide the information on line prior to the trauma of trying to phone.

There’s a really good app HMRC ( you need your government gateway ID) that gives you five years of tax history and how to notify when your tax code is wrong. It was very. Simple to correct when I went from two jobs to one and they havd me a tax refund in middle of year rather than waiting till April.

My memory is a bit hazy but I’m sure that my tax was deducted and then I filled out a form - p55? and claimed it back. This was drawing down on a pension so might be different but thought I’d mention it incase it helps

I was also going to suggest the app or Gov Gateway account. One of the reasons the phone service is so bad is that people are phoning with queries that HMRC want to be done online.

You can see their point when its financial information that's been discussed, likely fewer errors and misunderstandings and a written record of what's been discussed.

Have you earned any money this tax year? That could use a big proportion of your tax free allowance. But it should settle down fairly quickly, there's often teething problems when you make a big change to your income like this.

Phone the tax office, they are actually quite nice.

Oh and as it is ill health retirement you might bee able to claim your other pension.