HM Revenue and Customs (HMRC) treat your pension as ‘earned income’. This means we must deduct income tax from any pension payments we make to you, as instructed by the Tax Office.
When you retire and your pension comes into payment you will be allocated a BR (basic rate) tax code until we receive an automated tax update from HMRC.
When we receive your Tax Code from HMRC we will refund any overpayment of tax or collect any arrears of tax due.
How much income tax will I pay?
The amount of income tax that you pay depends on your total annual income. Other than your local government pension, your total income could include:
- the State Pension you get (either the basic State Pension or the new State Pension)
- Additional State Pension
- a private pension (workplace or personal) - you can take some of this tax-free
- earnings from employment or self-employment
- any taxable benefits you receive
- any other income, such as money from investments, property or savings
You do not pay any income tax, if your gross taxable income does not exceed your Personal Allowance.
The amount of income tax you pay in each tax year depends on:
- how much of your income is above your Personal Allowance, and
- how much of this falls within each tax band
HMRC should tell you how much your Personal Allowance is each time it changes.
Contacting HM Revenue and Customs
The HM Revenue and Customs Tax Office determines your Tax Code, rather than Merseyside Pension Fund. If you want to query the Tax Code that has been applied to your pension please contact HM Revenue and Customs
You will need to tell them:
- your National Insurance number
- your tax reference number which is: 428/M1
Contacting HM Revenue and Customs for PAYE queries and Self-Assessment
Find details on how to contact HM Revenue and Customs at HM Revenue and Customs - Income Tax: general enquiries
Or, you can write to HM Revenue and Customs at this address:
Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom
Telephone: 0300 200 3300
