Tax code

If your code is gone up, doesn’t it mean that your your tax free allowance has increased - I’m not an accountant but that’s what I thought. I hope someone more knowledgeable will one along. I’d like to know as well 😂

If your tax code is 950 it means you can earn up to 9500 without paying tax but you will be taxed on any income over that amount.

My tax code is for my private pension and it's gone down as more of my tax free allowance is being used up by my state pension.

The personal tax allowance is £12,570.

I am assuming you mean 95L which equates to £959 of personal tax allowance to set against your occupational pension.

Code 95L means you have somewhere between £950 and £959 left over after your State Pension is deducted from the Personal Tax Allowance but it will be rounded in your favour to £959.

The DWP tell HMRC what your State Pension will be. This will be shown in your online Gateway account.

£12,570 - £950 is £11,620 which means your State Pension must be c£894 every four weeks.

SP is paid in arrear. The tax code reflects what is due for the year even if you don’t receive the new rate until May.

If your tax code is 950L then that would mean your SP is only c£236 every four weeks i.e. £12,570 - £9,500 = £3,070 divided by 52 and multiplied by 4.

Have you only recently reached State Pension age? In the first tax year, it's common for HMRC not to adjust the tax code for the SP leading to an underpayment of tax at year end.

Silverbrooks

The personal tax allowance is £12,570.

I am assuming you mean 95L which equates to £959 of personal tax allowance to set against your occupational pension.

Code 95L means you have somewhere between £950 and £959 left over after your State Pension is deducted from the Personal Tax Allowance but it will be rounded in your favour to £959.

The DWP tell HMRC what your State Pension will be. This will be shown in your online Gateway account.

£12,570 - £950 is £11,620 which means your State Pension must be c£894 every four weeks.

SP is paid in arrear. The tax code reflects what is due for the year even if you don’t receive the new rate until May.

If your tax code is 950L then that would mean your SP is only c£236 every four weeks i.e. £12,570 - £9,500 = £3,070 divided by 52 and multiplied by 4.

Have you only recently reached State Pension age? In the first tax year, it's common for HMRC not to adjust the tax code for the SP leading to an underpayment of tax at year end.

I'm not at home today so can't check but mine is something like 79L which would be about right as my state pension is £900 and something a month. Not sure what I'll be getting in my private pension next month as it goes up but there will very little tax free left so I will pay more tax.

That sounds about right. £12,570 - £799 = £11,771 divided by 52 multiplied by 4 would be £905 four weekly (or just divide £11,771 by 13).

Assuming your total income is already more than £12,570 pa and no more than £50,270 pa, whatever increases you get in State Pension and occupational pension(s), you will pay 20% tax on those increases.