How your tax is collected
Through a tax code, a letter or a return, and why a month’s tax can differ from the plan’s.
Landfall works out each year’s tax as a whole, once the year’s income is known. In life it is collected as the year goes, in one of three ways.
- A pension provider takes tax before it pays you, using the tax code HMRC gives it.
- The State Pension is paid with no tax taken off. Its tax is collected through the tax code on another pension or a job. Where there is neither, HMRC sends a letter, a Simple Assessment.
- Income with no tax taken off, such as rent or self-employment, goes on a Self Assessment return.
A tax code can change during the year, when a pension starts, a lump sum is taken or income changes. So the tax taken in a month may not match what the plan shows for the year. The plan shows what the year’s tax comes to, not when it is taken.
More in How the numbers work
- What Landfall covers across the UKFour nations, each with its own income tax and its own care rules, and where the coverage stops.
- What Landfall covers across the UK, in more detailWhich figures depend on each person’s nation, a couple in two nations, and where the nation makes no difference.
- The words Landfall usesThe words a plan uses, and what each of them means here.
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