Tax adjustment on retirement

I wonder if anyone has any experience of this and I don't mean to brag thats not the intention of this post. I am currently paying 40% tax but plan to retire next year. I have several private pensions which will give me an income in excess of the tax threshold but will mean I will be subject to the basic tax rate (20% ?) on the excess. So my question is this when I retire and draw my pensions I presume I have to advise HMRC when I have my retirement date and then how long does it take to apply the necessary adjustment. I want to avoid paying 40% tax on my pensions because I would really struggle then. I realise I can write to HMRC but just wondered if anyone here has personal experience of this scenario or something similar.

Cheers all

Re: Tax adjustment on retirement

I'm not sure what the figures are, but it is 20% for any earnings above your allowance, but if you get above a certain amount it will increse to 40%.

Re: Tax adjustment on retirement

Yes Jimmy I realise that but how soon does it get adjusted when your income drops. The tax office are always much quicker at taking it than giving it back and that is what concerns me.

Re: Tax adjustment on retirement

It gets adjusted the day you start getting your pension, you will be allowed £9,490, anything over that is taxed at 20%, I think it's 40% after about £40,000.
The pensioners were going mad because they froze the allowance for them and raised it for the well off.

Re: Tax adjustment on retirement

When I retired the tax office dealt with it as normal, they take your tax free allowance from your total income and tax you on the rest as they have always done. Your Old age pension is always paid tax free but still counted in your total income.

Re: Tax adjustment on retirement

Your pension is not tax free Alan, it is classed as income, and is subject to tax if it exceeds your allowance, a married couple with pensions will be paying tax on their pensions.

Re: Tax adjustment on retirement

Hi Jimmy, I think you misunderstood my nposting. I said that your pension is paid untaxed and it is so. I also said that it is counted in your total income which is what you said.

Re: Tax adjustment on retirement

I understand what you mean Alan, but it contributes to your total earnings, which are taxed when you exceed the allowance.

Re: Tax adjustment on retirement

OK thanks guys that sounds OK. I won't be getting my state pension for quite a few years but my private pensions will be subject to some tax as I will go over the earnings threshold.

Re: Tax adjustment on retirement

Emigrate! I'm a self funded retiree and, thanks to Mr Costello, because I am over 60 my entire pension is tax free (with no limit to the amount) and because of this I can earn an additional (approx) $29000 before I pay any tax at all.

Ain't retirement bliss?