ChatterBank1 min ago
SERPS were bad
5 Answers
A tax adviser is needed. We have been asked for nearly �1000 out of pension for tax on a SERPS pension which had already been taxed. We need to know why - and if the tax office has got it wrong - as they have done before.
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Well, income from any pension source is taxable, in the same way that any other income is (interest on bank accounts, dividends). One is entitled to one's personal allowance of earnings on which no pay is payable, but earnings above that figure are taxable.
On what basis are you asserted "a SERPS pension that has already been taxed". Where do you get that idea from?
On what basis are you asserted "a SERPS pension that has already been taxed". Where do you get that idea from?
SERPS was a pension scheme in force 30+ years ago. Like all pension schemes, when you get your pension you have to be taxed on it although you have already paid tax on the money you earned. If somebody comes up with a better idea it would be wonderful. Luckily my pension was through NHS and Council but when it comes it is already taxed. Unlike SERPS. This is taxed during the year. A bill just before Christmas of �800-�900 is not very pleasant.
I am certainly old enough to remember what SERPS is about it stands for State Earnings-Related Pension Scheme. It came before the Second State Pension but after the Graduated Scheme.
I think you will find that you didn't pay tax on the earnings that were syphoned off into the pension contribution. And you didn't pay NI on it either.
I think you will find that you didn't pay tax on the earnings that were syphoned off into the pension contribution. And you didn't pay NI on it either.
On second thoughts I withdraw part of the above (before Factor has the chance to put me straight). I'm muddling it with private pensions that ran in parallel over this period.
Yes you did pay tax and NI on your earnings and the Government provided you an additional pension based on your earnings above the level that which the State Basic Pension cuts in. Your additional NI and perhaps part of your tax went to providing for your SERPS pension.
Whether you got a good deal on it is impossible to judge - you'd have to calculate what equivalent pension you would have earned from being contracted-out within the Guaranteed Minimum Pension part of a private pension - which was the alternative to the SERPS.
Anyway, pensions are taxable - which was your original question.
Yes you did pay tax and NI on your earnings and the Government provided you an additional pension based on your earnings above the level that which the State Basic Pension cuts in. Your additional NI and perhaps part of your tax went to providing for your SERPS pension.
Whether you got a good deal on it is impossible to judge - you'd have to calculate what equivalent pension you would have earned from being contracted-out within the Guaranteed Minimum Pension part of a private pension - which was the alternative to the SERPS.
Anyway, pensions are taxable - which was your original question.
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