Retiring? Make sure you’ve got the right tax code
If you’re retiring from the Police and planning a second career, it pays to make sure you’ve got the right tax code.
If you're retiring from the Police and planning a second career, making sure you've got the right tax code might not be your number one priority - but getting it wrong could cause problems further down the line.
Once you've retired, you'll receive your Police or Local Government Pension Scheme (LGPS) Pension for the rest of your life, regardless of whether you decide to take it easy or start a second career.
If you're planning on starting a new job once you've retired, you should make sure you tell your new employer that you're already receiving a pension.
This is because everyone is allowed a personal tax-free allowance, which is allocated via your tax code.
Usually, when you retire your tax code is transferred directly to your pension provider. So if you go into further employment and you're already receiving a pension that is using up your tax-free allowance, your new employer will need to deduct tax from all of your new income.
- If you're likely to be a basic rate tax payer with a combination of your pension income plus your new income, your tax code in your new job is likely to be BR.
- If you're likely to be a higher rate tax payer with a combination of your pension income plus your new income, your tax code in your new job is likely to be D0. If this is you, adjustments will need to be made to your tax code for your pension income to take into account that you'll have paid too much tax at the higher rate.
Always check your tax code - paying too much or too little will annoy either you or the tax man! It's important to tell HMRC about changes to your income as soon as possible so you don't end up with a large tax bill at the end of the tax year.
There's more useful information about tax codes on HMRC's website.
Our online Retirement Centre
If you're starting to plan for your retirement, there's lots of useful information on our online Retirement Centre, where you can find out more about pensions, second careers, starting a new business, planning for future expenses and managing your budget.