HMRC has issued a reminder to pensioners about the importance of keeping their tax details up to date, warning that incorrect information could lead to paying the wrong amount of tax. The warning comes after a taxpayer queried whether their tax code or personal allowance might be affected by receiving both a full-time salary and pension payments from a defined benefits scheme.
Every individual is entitled to a standard personal allowance of £12,570 per tax year, meaning they can earn this amount without paying income tax. Earnings above this threshold are taxed at 20%, with higher rates applying as income increases. HMRC explained that a tax code may be affected if a personal allowance is split between multiple income sources, such as a salary and a pension.
Tax codes are used by employers or pension providers to calculate the correct tax deduction. An incorrect code could result in overpaying or underpaying tax. Taxpayers can check their current tax code online via their personal tax account on the Government website, through the HMRC app, on a recent payslip, or on a Tax Code Notice letter from HMRC.
If a tax code is wrong, HMRC advises updating the information it holds. The quickest way is to log into the gov.uk account to review and correct employment, pension, and estimated taxable income details. HMRC will then update the tax code and notify both the taxpayer and their employer or pension provider within 15 working days.
Once the new tax code is implemented, it will appear on the next or subsequent payslip for monthly payees, or on the third payslip for weekly payees. Pensioners are urged to act promptly to avoid any disruption to their tax payments.
