ARmy Rumour SErvice

Originally Posted by timex

The taxman told me that he would tax my Military pension first as its the one income that will be permanent so therefore easier for tax purposes. Still shit that its 40% but lots of others would be very happy just to have a pension.

It all depends whether or not your pension is your main source of income against any new job/career you have started since leaving.
Even after the recent debacle dressed up as a Budget, as Dingerr says the the taxman won't hit any of your pension for 40% until it reaches the £34,371 threshold. Up to that point it is taxed at 20% over and above the PAYE tax threshold (personal allowance) of £8105 pa. If your pension is below the personal allowance threshold, you don't pay tax at all.

Originally Posted by Gassing_Badgers

Shouldn't make any difference. You are taxed on total earnings, and you will recieve a tax code on each. It may be that you pay a small ammount of tax on pension, and the full 20% on your job - or vice-versa, it really doesn't make much difference.

If your total income does not take you onto 40% then it should not make a diffrence but you are depending on HMRC getting your jobs coordinated and splitting your allowances right between them when coding.

My advice, as someone that led a HMIT PAYE team and passed both sets of exams, would be that if you have one larger income that exceeds your allowances in itself then get the allowances all set against that and a BR tax code against the other job(s). This way will ensure you get the full benefit of your allowances and won't have to split allowances in year then wait while HMRC fanny about checking their guess was right.

If you are a 40% taxpayer then I'd do the same but accept that there will be some adjusting to do at year end (when HMRC get round to you) that will mean you end up with an underpayment of some description. Better to owe them than they own you though. There is always a chancce they will write a small underpayment off as uneconomical to collect.

If your pension is fixed for the year and less than your allowances, and you can guarantee that, then I'd suggest you set your allowances against the other job but ask HMRC to "code out" the pension. That will reduce your tax code against the other job but take off enough allowances to cover the pension and allow the pension to be paid Net. Then the reduced allowances go against the job and you will automatically pay the right tax, even if you break the 40% barrier.


Conductor - my heart bleeds, I am a 40% taxpayer now and still will be when I end up a pensioner. Terible isn't it? I can't understand why we get no sympathy either

The Iron

Unless there's a National Insurance angle I'm not aware of. You don't pay NI on a pension and I'm not sure how it is applied to other earnings, worth checking to see if there's a difference (even though it would be very marginal, if one exists at all).

I haven't looked into it because I'm not in paid employment (spend too much time on here to work).

Originally Posted by eodmatt

Now I agree that the military pension should not be taxed. You already paid tax on the income that generated the pension so it seems incongruous that you should pay tax on the pension. I agree. But where you and I walked the streets with a weapon full of death on our arms (did you?) to earn our pension, most people didn't. And that's also where tax may be seen to be unfair. We pay tax at the same rate whether we have earned our pension doing fuck all or doing something.

Pension contributions are deducted before tax is applied so you will not have paid tax on the segment of income that generated the pension.

If your pension is non-contributary then you didnt pay tax on contributions either cause you didnt make any.

Love the last point. So only steely eyed dealers of death have earned their pensions? You aren't the TA Cpl / civvie TA Centre caretaker that told me I was a waste of space because I was at University at 18 while he was shitting in plastic bags in OPs and patrolling Crossmagglen by any chance? I thought he was a one off!

Originally Posted by Brotherton Lad

The Iron

Unless there's a National Insurance angle I'm not aware of. You don't pay NI on a pension and I'm not sure how it is applied to other earnings, worth checking to see if there's a difference (even though it would be very marginal, if one exists at all).

I haven't looked into it because I'm not in paid employment (spend too much time on here to work).

NI stops at pensionable age. 65 as it stands I believe.

Originally Posted by PBUH

NI stops at pensionable age. 65 as it stands I believe.

I know, but I'm drawing my Army pension now (not 65 for a fair few years). It's whether there's a difference regarding NI if I took up paid employment on top of the pension (I doubt there is, but I don't know for sure).

Originally Posted by Brotherton Lad

I know, but I'm drawing my Army pension now (not 65 for a fair few years). It's whether there's a difference regarding NI if I took up paid employment on top of the pension (I doubt there is, but I don't know for sure).

I dont think you pay it on pensions. NI is a strange beast. They only chase you if your total contribution for the year is below a set generic minimum. Whereas with income tax it is wholly depndent on total taxable income and they will chase you down.

I am in receipt of a full Army Pension and do not pay any NI on it. However, I also have a part time driving job and I pay tax and NI contributions on any money earned.