Income tax

[saundra]

I'm in shock just got a letter from tax dept
Iv,got to pay tax on my state pension
Never ever paid before

[Workingman]

Saundra, if you are on the full State Pension of £221.20 per week your annual payments come to £11,502.40p.

However, the tax free allowance is £12,570 so for every £1 of income you get over that you pay tax at the rate of 20%. If you are receiving some extra payments, say from Bill's insurance / pension, they could take you over the £12,570 limit and you pay tax. HMRC only takes tax from one source so it would be your pension. They do not take a bit from both.

I am in the same position with the OAP and my RAF pension plus other bits and pieces so I also get my OAP taxed. Things such as housing benefit, disability allowance or PIP are not included as income, or so I believe

That's just an outline. If you are in any doubt you should try Citizen's Advice or Age UK for more and better details. Good luck.

[saundra]

WM had a cuppa and calmed down I think I get extra cash because bill paid more contribution,a I was once told
He didn't have a private or raf pension

Never mind just read in the dm government are going to raise social housing in autumn budget sigh

[Workingman]

Yes, that would make sense, however, another thing from my suspicious mind. This time of year is odd for HMRC notifications of upcoming tax payments so be careful of scams.

Make sure there are no offers of tax free investments or pension reviews or pressure to make a quick decision on investments in the letter. If you are unsure get in contact with your local HMRC office using a "known" number not any in the letter. Again, Citizen's Advice or Age UK can help.

Here's your local link. https://www.mylocalservices.co.uk/Bridl ... 88185.html

If you phone make sure to have your NI number handy. It probably is just HMRC being HMRC, they are not known for their efficiency.

[saundra]

WM it's a first time letter I had a letter months ago to say they would be in touch I can register with them to go online but I haven't because in this case I prefer a letter to keep I don't have a printer and all that park thanks for info much appreciated

[Kaz]

It does seem unfair

[TheOstrich]

Saundra, they don't stop tax from a State Pension; you should always receive that in full. If you have a another pension, like WM's RAF pension, then they'll take any tax you might owe from that.

Happens I get a State Pension that's actually slightly greater than the £12,570 single personal allowance anyway, and I also get a small occupational pension, so I have to pay a bit of tax every year.
The tax man has coded it so they collect all the tax I owe from the occupational pension. They don't fiddle with the State Pension.

If I only had the State Pension, and no occupational pension they could collect the tax from, (which is the situation I think you might be in), then they have to send me a bill after every tax year finishes - and I have to send them a cheque or whatever!

[Workingman]

Yes, Ossie, I got it the wrong way round. It's my RAF pension that gets the hit because it is the largest of my 'extras', the OAP is left alone. Everything else is left 'as is'.

[TheOstrich]

Yep, as far as I am aware, there's no mechanism by which tax can be deducted from State Pension.

If you are due to pay tax, the Inland Revenue will usually (but not always) tax the largest source of other income you have, whether it's an occupational pension like your RAF pension, or even a job if you've continued working beyond retirement, stacking shelves in Asda for example......

Where pensioners (and other folk) are going to get caught out this year - and I'm one of them - is where in 2023/24 (the year to 05/04/24), they earned more than £500 on bank or building society interest, so on, which is paid gross and thus liable to tax. There's been a "perfect storm" of higher interest rates and the lowering of the tax-free threshold from £1,000 to the said £500.

I know how much I've earned, and I know how much tax I owe. I was going to go on-line, tell them, and ask them to re-code my occupational pension accordingly. But all the advice from HMR&C is "don't call us, we'll tell you once the banks etc. have notified us independently of your income". Right, so I'm not bothering, then. I'll wait and see what sort of figure they come up with when I get an amended code - and I'll lay you a tenner it won't be anywhere near correct .....

I'll then have to start trying to get them to put it right. Lay you another tenner that won't be resolved this side of next April .... by which time we'll be in another tax year!

[saundra]

Bottom of letter says
Your state pension is taxable
As your state pension is more than the allowance we used you have paid to little tax
This is the first letter I've ever had