Additional income and benefits


People registered as blind receive an extra tax allowance of £980.

Income from your company pension is taxable. Normally it is taxed at source before you receive it and the Inland Revenue give the pension payer a tax code for you so that they can calculate the tax due. You will be sent a copy of the notice of coding which shows how the tax code is calculated.

The tax code is worked out as follows. Your tax allowances are the amount of money you can have each year without paying any tax.

Your DWP retirement pension is taxable, so the Revenue deduct the amount of that from your allowances to leave the amount of income you can have before you pay tax. For example, your age allowance may be £7,180 and your retirement pension £88 a week or £8,888 a year. £7,180 minus £8,888 equals £898.

That means you can have £898 a year on top of your retirement pension without paying tax. The figure is converted to a tax code by knocking off the last number, making 89. The code is then used to calculate the tax due on the pension you get from your job. All it means is that you pay tax on the amount above the £890 that remains from your allowances.


More information

Additional income and benefits - Tax on Foreign Pensions


Income from pensions paid by countries outside the UK, whether from a foreign state or a foreign company, is liable for tax in the UK. That is True even if the pension is paid abroad into an account in a foreign bank and used only abroad � on holiday, for example.
The value of a foreign pension changes with the rate of exchange. The pension should be taxed on its actual value in sterling when you receive it.
However, the Inland Revenue may offer to tax it on the basis of an average rate of exchange over the tax year. You can accept that method or, if you think it would be better for you, insist that the tax is levied on the actual value you receive in . . . ... see: Additional income and benefits - Tax on Foreign Pensions