Just started receiving my State Pension HMRC

[Skyedriver]

Just pasted the 65 milestone, started collecting my State Pension but continuing working for the moment.
Just received my Notice of Coding and they've reduced it by the amount of the Pension. Is this right?

[The Leaper]

What I think you mean to say is that your new State pension has been offset against your total personal allowance by HMRC. This is correct because State pension is subject to tax...it's not tax free. As you are still working, your tax code will be adjusted appropriately so that your employer will account to HMRC for all your tax liability via PAYE.

R.

[Eric Mc]

Just make sure they have allocated the personal allowance against your state pension correctly. They don't always get it right - especially in the first year in which you start receiving the State Pension.

[Skyedriver]

Thanks for that info.
Of course I'm paying extra tax now and when I actually retire in a few weeks then I'll be able to claim it back won't I?
Actually looking to go self employed working for the same company part time from home. So I'll need an accountant who can sort this out for me.
Further complicated in that I'm in England at the moment but moving to Scotland in about a week time if the house sale goes through.

[TwigtheWonderkid]

I think you can earn £11850 tax free. Anything above that is taxed. Doesn't matter if the earnings come thru work as an employee, work as a self employed person, pension payments, or investment interest (although I think you can earn £1000 in interest tax free on top of your £11850).

So all your income gets added together and you pay the relevant tax on the total.

[Skyedriver]

TwigtheWonderkid said:

I think you can earn £11850 tax free. Anything above that is taxed. Doesn't matter if the earnings come thru work as an employee, work as a self employed person, pension payments, or investment interest (although I think you can earn £1000 in interest tax free on top of your £11850).

So all your income gets added together and you pay the relevant tax on the total.

Understand that but it's because I "earn" my state pension but it's not actually taxed that the reduce my £11850 allowable earnings (hence tax code 1185) down to something like 220 (or I can earn £2200 from my employer before paying tax)

[Monkeylegend]

Pensions Dept are very lazy, they just pay you the full amount you are entitled to, and HMRC adjust your tax code to take this into account, and get somebody else to collect your tax for them, in my case my private pension provider, based on the tax code given to them by HMRC.

[Eric Mc]

By "Pension Department" I presume you are referring to the Department for Work and Pension (DWP) who administer the State Pension.

For the OP, HMRC might take issue with you suddenly ceasing being an employee with a company and immediately being re-hired on a "self employed" basis. What will be different in the relationship with your employer that demonstrates that the situation is genuinely one of you being in business on your own account rather than being a part time employee?

[Monkeylegend]

Eric Mc said:

By "Pension Department" I presume you are referring to the Department for Work and Pension (DWP) who administer the State Pension.

Yes, that's me being lazy

[Skyedriver]

Eric Mc said:

By "Pension Department" I presume you are referring to the Department for Work and Pension (DWP) who administer the State Pension.

For the OP, HMRC might take issue with you suddenly ceasing being an employee with a company and immediately being re-hired on a "self employed" basis. What will be different in the relationship with your employer that demonstrates that the situation is genuinely one of you being in business on your own account rather than being a part time employee?

Hello again Eric
You keep offering me advice, one day you'll be billing me...
The difference is that unlike travelling into the office every day and working around 7.5 to 8.0 hours, I'll be working from a new home, now 265 miles from the office on a part time ad-hoc basis.
Will that satisfy HMRC?
Thanks

[Eric Mc]

Skyedriver said:

Hello again Eric
You keep offering me advice, one day you'll be billing me...
The difference is that unlike travelling into the office every day and working around 7.5 to 8.0 hours, I'll be working from a new home, now 265 miles from the office on a part time ad-hoc basis.
Will that satisfy HMRC?
Thanks

As long as you don't claim mileage.

[Skyedriver]

Thanks Eric
No commute, seen enough of the M6-M74-M73-M80-A84-A85 to drive it in my sleep. In fact there's times I probably have.

[Skyedriver]

Eric Mc said:

Skyedriver said:

Hello again Eric
You keep offering me advice, one day you'll be billing me...
The difference is that unlike travelling into the office every day and working around 7.5 to 8.0 hours, I'll be working from a new home, now 265 miles from the office on a part time ad-hoc basis.
Will that satisfy HMRC?
Thanks

As long as you don't claim mileage.

Hello Eric,
you have mail

[Eric Mc]

Replied.

[Nimby]

Skyedriver said:

Just pasted the 65 milestone, started collecting my State Pension but continuing working for the moment.
Just received my Notice of Coding and they've reduced it by the amount of the Pension. Is this right?

Yes that's how they do it. Caught me out too until I noticed the "W" (I think, maybe some other letter) at the end of the new code. This means it's a "week 1" basis code and your employer will only tax that month's pension, not the year-to-date amount.