Discussion
Is there anyone on here who understands basic tax or would like to challenge their brain for 5 minutes!
My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
The HRMC app suggest he should only be getting £19,596.20 per year.
Gross of £23,608
Tax free allowance of £3540
Tax at 20% is 4011.8.
So he's doing better than expected.
(Interesting tax code?)
I assume his pension changes over the year, so it's just 13 x railway + 13 x state.
Gross of £23,608
Tax free allowance of £3540
Tax at 20% is 4011.8.
So he's doing better than expected.
(Interesting tax code?)
I assume his pension changes over the year, so it's just 13 x railway + 13 x state.
Edited by supersport on Tuesday 20th February 16:22
CAH706 said:
Is there anyone on here who understands basic tax or would like to challenge their brain for 5 minutes!
My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
DWP don't tax state pensions at source, they always use the individuals tax code for it. The 354L is £12570 - £9028.My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
£640 x 13 = £8320 though not £9028.
CAH706 said:
Is there anyone on here who understands basic tax or would like to challenge their brain for 5 minutes!
My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
There's something odd with your figures.My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
Gross Pay = £14,520 + £9,028 = 23608
Tax free allowance = £3540
Taxable Gross = £20,068
Tax @20% = 4014
Net pay = £3540 + (£20,068- £4014) = £19594
Rufus Stone said:
CAH706 said:
Is there anyone on here who understands basic tax or would like to challenge their brain for 5 minutes!
My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
DWP don't tax state pensions at source, they always use the individuals tax code for it. The 354L is £12570 - £9028.My father-in-law has a railway Pension paying £14,580 per year and state pension paying £9028 per year.
I calculate that he should receive after tax £21,306 ( using an online take home calculator and ignoring NI) per year, but his pension only pays him £20,553 (£941 every 4 weeks for his railway pension & £640 every 4 weeks for the state pension)
His tax code is 354L
I’m sure I’m missing something simple but I just can’t get the numbers to balance!
£640 x 13 = £8320 though not £9028.
The state pension is actually calculated for an individual on a weekly basis - although it is paid on a "four weekly" (not monthly) basis.
When did he start receiving the State Pension (exact date please)?
And in the letter he got from the Pension Service covering tax year 2023/24, what WEEKLY amount did they tell him he would be getting?
When did he start receiving the State Pension (exact date please)?
And in the letter he got from the Pension Service covering tax year 2023/24, what WEEKLY amount did they tell him he would be getting?
Thanks all
The only detail I’ve seen for his state pension is that it is £9028 per annum. I’ll see what other paper work he has but he doesn’t get the full pension due to being contracted out. He’s had the pension for over 2 years now.
He gets the state pension paid 4 weekly and its £640 currently
He gets taxed a small amount on his Railway pension and then an amount on his state pension (I think)
I’d used a website to calculate his income - this suggested
Salary 23608
Tax 2207
NI 1103.80 - but he doesn’t pay this on a pension income does he?
Income 21400
The only detail I’ve seen for his state pension is that it is £9028 per annum. I’ll see what other paper work he has but he doesn’t get the full pension due to being contracted out. He’s had the pension for over 2 years now.
He gets the state pension paid 4 weekly and its £640 currently
He gets taxed a small amount on his Railway pension and then an amount on his state pension (I think)
I’d used a website to calculate his income - this suggested
Salary 23608
Tax 2207
NI 1103.80 - but he doesn’t pay this on a pension income does he?
Income 21400
Edited by CAH706 on Tuesday 20th February 20:00
Edited by CAH706 on Tuesday 20th February 20:03
Try to obtain the LETTER he got from the Pension Service. You need that to check that HMRC are treating the pension correctly in their adjustment to his PAYE code.
Corrected to insert the word "letter".
Do you know that date he started becoming eligible for State Pension?
Depending on his date of birth, it would have been when he turned either 65 or 66. For example, I was born in 1958 so I will start getting the State Pension later this year (yippee!!!).
As the pension starts with effect from your 65th or 66th birthday, unless you happen to have a birthday that falls on 6 April, most people do not receive their full annual state pension amount in the first year they start receiving the State Pension.
That is why, if 2023 or 2024 is the first year your dad started receiving the State Pension, then the date he started being eligible is important for working out the EXACT State Pension amount he was due to receive in the relevant tax year.
If he has been receiving the State Pension for a number of years, then, usually, the correct State Pension amount is notified to the pensoner in a letter, usually sent to the pensioner in February. For example, pensioners will be notified of their WEEKLY State Pension amount for tax year 2024/25 (6 April 2024 to 5 April 2025) in a letter they will receive in the next few weeks. It's amazing how many people do not understand the importnace of this letter. I usually need to see it when completing the Self Assessment Tax return.
HMRC get a similar notification from the Pension Service and they use this information to adjust the individual's PAYE Tax Code. Occasionally they get it wrong, which is why keepiing that letter is so important.
Corrected to insert the word "letter".
Do you know that date he started becoming eligible for State Pension?
Depending on his date of birth, it would have been when he turned either 65 or 66. For example, I was born in 1958 so I will start getting the State Pension later this year (yippee!!!).
As the pension starts with effect from your 65th or 66th birthday, unless you happen to have a birthday that falls on 6 April, most people do not receive their full annual state pension amount in the first year they start receiving the State Pension.
That is why, if 2023 or 2024 is the first year your dad started receiving the State Pension, then the date he started being eligible is important for working out the EXACT State Pension amount he was due to receive in the relevant tax year.
If he has been receiving the State Pension for a number of years, then, usually, the correct State Pension amount is notified to the pensoner in a letter, usually sent to the pensioner in February. For example, pensioners will be notified of their WEEKLY State Pension amount for tax year 2024/25 (6 April 2024 to 5 April 2025) in a letter they will receive in the next few weeks. It's amazing how many people do not understand the importnace of this letter. I usually need to see it when completing the Self Assessment Tax return.
HMRC get a similar notification from the Pension Service and they use this information to adjust the individual's PAYE Tax Code. Occasionally they get it wrong, which is why keepiing that letter is so important.
Eric Mc said:
Try to obtain the LETTER he got from the Pension Service. You need that to check that HMRC are treating the pension correctly in their adjustment to his PAYE code.
Corrected to insert the word "letter".
Do you know that date he started becoming eligible for State Pension?
Depending on his date of birth, it would have been when he turned either 65 or 66. For example, I was born in 1958 so I will start getting the State Pension later this year (yippee!!!).
As the pension starts with effect from your 65th or 66th birthday, unless you happen to have a birthday that falls on 6 April, most people do not receive their full annual state pension amount in the first year they start receiving the State Pension.
That is why, if 2023 or 2024 is the first year your dad started receiving the State Pension, then the date he started being eligible is important for working out the EXACT State Pension amount he was due to receive in the relevant tax year.
If he has been receiving the State Pension for a number of years, then, usually, the correct State Pension amount is notified to the pensoner in a letter, usually sent to the pensioner in February. For example, pensioners will be notified of their WEEKLY State Pension amount for tax year 2024/25 (6 April 2024 to 5 April 2025) in a letter they will receive in the next few weeks. It's amazing how many people do not understand the importnace of this letter. I usually need to see it when completing the Self Assessment Tax return.
HMRC get a similar notification from the Pension Service and they use this information to adjust the individual's PAYE Tax Code. Occasionally they get it wrong, which is why keepiing that letter is so important.
That’s really helpful Eric.Corrected to insert the word "letter".
Do you know that date he started becoming eligible for State Pension?
Depending on his date of birth, it would have been when he turned either 65 or 66. For example, I was born in 1958 so I will start getting the State Pension later this year (yippee!!!).
As the pension starts with effect from your 65th or 66th birthday, unless you happen to have a birthday that falls on 6 April, most people do not receive their full annual state pension amount in the first year they start receiving the State Pension.
That is why, if 2023 or 2024 is the first year your dad started receiving the State Pension, then the date he started being eligible is important for working out the EXACT State Pension amount he was due to receive in the relevant tax year.
If he has been receiving the State Pension for a number of years, then, usually, the correct State Pension amount is notified to the pensoner in a letter, usually sent to the pensioner in February. For example, pensioners will be notified of their WEEKLY State Pension amount for tax year 2024/25 (6 April 2024 to 5 April 2025) in a letter they will receive in the next few weeks. It's amazing how many people do not understand the importnace of this letter. I usually need to see it when completing the Self Assessment Tax return.
HMRC get a similar notification from the Pension Service and they use this information to adjust the individual's PAYE Tax Code. Occasionally they get it wrong, which is why keepiing that letter is so important.
I’ll pop up and see him this morning and will dig the letter out. Ive only seen a letter stating the annual amount and his tax free allowance but that was from HNRC.
He got the pension at 65 and has had it over 2 years now - he was born April 12th so has had it for 2 full years now and the bulk of the other year (so just under 3 years)
As he was born on 12th of April, he's one of the lucky people who's first State Pension would have been very close to the annual amount he was entitled to in the first year of receiving his State Pension.
My birthday is mid year so for tax year 2024/25 I will not receive the full annual entitlement for tax year 2024/25. I will from 2025/26 onwards.
He would have received his 2023/24 Pension letter back in February 2023.
He should be receiving his 2024/25 Pension letter very soon so he needs to keep an eye out for it.
My birthday is mid year so for tax year 2024/25 I will not receive the full annual entitlement for tax year 2024/25. I will from 2025/26 onwards.
He would have received his 2023/24 Pension letter back in February 2023.
He should be receiving his 2024/25 Pension letter very soon so he needs to keep an eye out for it.
I often have to chase clients for these letters - and they invariably send me the wrong one.
For example, if I was completing their 2022/23 tax return in November 2024 (well before the filing deadline), they would send me the 2023/24 letter they had received in February 2023. What I really needed was the 2023/23 letter - which they would have received way back in February 2022.
For example, if I was completing their 2022/23 tax return in November 2024 (well before the filing deadline), they would send me the 2023/24 letter they had received in February 2023. What I really needed was the 2023/23 letter - which they would have received way back in February 2022.
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