While your lump-sum payment is completely tax-free*, the monthly payments your receive are considered to be income and are taxed just like your earnings were using Pay As You Earn (PAYE).
*(Please note - if your employer has awarded you Compensatory Added Years the lump sum arising from them could be liable to a tax charge)
Questions about tax
The tax you pay is calculated from all income you receive including the State Pension. Because of this, the Strathclyde Pension Fund Office - who administer your pension - are unlikely to know about all the different incomes you may have.
All tax enquiries should be directed to H.M. Inspector of taxes:
H.M. Inspector of Taxes,
Centre 1,
East Kilbride,
Glasgow
G79 1AA
Phone 013552 75000
Always quote your National Insurance number when contacting Centre 1.
Your tax code
For your first pension payment, the tax code used for your PAYE will normally be the one used in your last employment. Because this won’t take into account your new income, Centre 1 will confirm the exact code to be used, so it may well change for subsequent payments.
If your last employment tax code isn’t known, the emergency tax code will be used to start with and this will later change.
TaxHelp for Older People
TaxHelp for Older People (TOP) is a national charity which provides independent and free advice for older people on low incomes.
Anyone aged 60 or over with a household income of £15,000 or less can get advice.
Any personal income tax problem can be dealt with - from dealing with tax codes to claiming overpaid tax.
If you think you are eligible for help, call TOP on 0845 601 3321. Calls are charged at local rates.
More information
You can download A Guide to the Local Government Pension Scheme, with full details of all the features and how to take advantage of them, to print out and read when you want. If you would rather receive a copy by post, contact us.
If you’ve got further questions, visit the pensioner member frequently asked questions page of this site.