Forces Pension Society: A Little Reminder About Tax
Category: News
Publish date: 11/04/2023
Mary Petley of the Forces Pension Society advises on the allowances for the new tax year.
The new tax year has just begun, and, in this short article, the Forces Pension Society set out what you need to remember about tax once in Civvy Street.
Pensions and EDP income count as ‘earned income’ and they are normally taxable.
The 2023/24 income tax rates are:
Up to £12,500 Zero
£12,501- £50,270 20%
£50,271- £125,140* 40%
Over £125,140* 45%
If you are going to live in Scotland, the rates are slightly different:
Up to £12,570 0%
£12,571-£14,732 19%
£14,733-£25,688 20%
£25,689-£43,662 21%
£43,633-£125,140* 42%
Over £125,140* 47%
*For those with earned income of over £100,000, for every £2 you earn over £100,000 you will lose £1 of your zero-rated allowance. At earnings of £125,141 the individual would have no zero-rate allowance at all (as reflected in the figures above).
The band assessed as ‘zero’ is your tax allowance. You are only allowed one tax allowance and, normally, it is counted against your pay.
If you have both pay and pension and/or EDP income, you need to either:
- Contact HMRC to notify them of income from these separate sources so that they can issue the employer with the correct tax code, thus ensuring that you are correctly taxed; or
- Work out for yourself what you will owe over and above what your employer is deducting… and put money aside monthly so that you have it when the tax bill lands on your doorstep.
We recommend the former as the best solution.
If you are going to be self employed, you will need to declare your pension/EDP income, and the tax paid on it, on your annual Self Assessment tax return. You will be issued with a P60 each year to help you with this.
The default position is that Armed Forces pensions are normally taxable in the UK. If you move abroad and are in receipt of pension and/or EDP visit this webpage to learn more.
If you are a Member of the Forces Pension Society and have questions on a pension issue, email them at [email protected]
If you are not a Member but would like to learn more about us, visit
Mary Petley, Forces Pension Society