Income tax explained

Your LGPS pension is a taxable income, but any lump sum is paid tax free. The amount of tax that you pay on your pension depends on your total income across all sources.

Your first pension payment

Your first pension payment will be subject to the emergency tax code, as determined by HMRC on an annual basis.

If we have received a P45 for the current tax year with your forms, the tax code on that form will be used but on a month one basis. This means that we will only give you one months’ worth of tax allowance before deducting tax at 20% and/or 40% (depending on the amount of the payment), even if you are receiving arrears for a few months.

This will then be reported to The HM Revenue and Customs Office (HMRC) who will determine your correct tax code and notify us electronically. This will often generate a tax refund, where applicable, which will be paid in your next pension payment.

Tax codes

HMRC can instruct us to update your tax code throughout the year which may result in a refund of tax paid or any arrears of tax due being collected.

Please note: we do not hold the full information used by HMRC to calculate a tax code (as we do not hold all the data on your full incme from all sources) we cannot amend your tax code without instructions from HMRC and cannot contact the tax office on your behalf. If you have any query at all with your tax code, you shoud contact HMRC.

Contact Details

HM Revenue and Customs
PAYE
PO Box 1970
Liverpool
L75 1WX

Phone: 0300 200 3300

Website: https://www.gov.uk/government/organisations/hm-revenue-customs

Staffordshire Pension Fund’s reference is 586/PENS. You may also be asked to quote your National Insurance number.

An explanation of tax codes can be found on HMRC’s website.