Donate SIGN UP

Tax On Pensions

Avatar Image
Thisoldbird | 15:42 Sat 28th Sep 2024 | Business & Finance
16 Answers

Last April after the rise in State Pension it was apparent I had slipped into the tax payer bracket. 

A few weeks after the raise I rang the Pension Service to ask when or how was this tax taken.. the very pleasant lady replied it would be taken at source...as my only income is from my lower rate state Pension and my late husband's SERPs . I asked again how would this be paid..again it would be paid at source so knowing no better I assumed the Pension Servive had it in hand. 

 

Yesterday I received a tax bill for 2023-4..a whole years payment when I had understood it was taken at source... no I wasn't! 

Nor is it being taken for the currant tax year.  

Why give pensioners a rise and taking back by another method. 

Bewildered by it all!!

Gravatar

Answers

1 to 16 of 16rss feed

Best Answer

No best answer has yet been selected by Thisoldbird. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.

If that's what they said I don't see why they would have given that answer - state pensions are never taxed at source and they should have known that. But it doesn't change the fact that the tax is due, I'm afraid.  The amount can't be huge and hopefully they'll have given you time to pay it- maybe 31st December.

We had a similar request once and forgot to repay it in December and they simply sent a polite reminder about 6 months later so we paid up then.

The State Pension isn't taxed at source and as for increasing the pension and then taking it back, you are paying 20% tax only on the amount over your personal allowance so you'll have more still than the previous year, even after tax.

They can't ask you to pay for this tax year, 2024/25 because they won't know how much tax you owe until the tax year ends on April 5th.

Income tax is payable on pensions in the same way as it is on wages. Basically any income over £12,570 is taxable, unless you have a different tax code.

Question Author

Of course I expected to pay,  the very reason I rang them in the first place was to make sure i was doing the right thing..

 

My anger is being told the wrong facts..the very department that should surely give correct information.  That's all!! 

I seem to recall a campaign, 'Tax Doesn't Have To Be Taxing'.

 

More government deflection and misinformation it appears.

It's better to raise tax questions with HMRC rather than the employer.

Or just look at your tax code on your  pension to see ifits what you exoected.

This is about the State Pension, not a company pension so there is no employer involved.

Okay  but does it matter ...I was talking generally. 

Question Author

Correct Corbyloon 

The same point applies. Ask whoever pays you -  dwp here- what the code is they are using;  ask Hmrc what your code should be.

No excuse for Dwp getting this wrong though.

There is no tax code used by DWP because it's not taxed at source and The Pension Service (PS) should know that.

The tax year runs from April 6th to April 5th and the PS should also know HMRC will contact pensioners a few month after the 5th April if there's any tax to be paid for the previous tax year.

I'm not sure how DWP could get something so obvious so wrong. But I'd have thought it would have been obvious to the recipient that they are receiving the gross amount.

Hmrc would certainly have given the right answer.

Apologies in advance to thecorbyloon if they are going to have to correct me if I have used the wrong term in DWP and should have said Pension Service.

This is partly why whenever I speak to government departments these days I ask for the name of the person I am speaking to and also the town the office is in that I have got through to as they use many different ones.  The office you think you have called is not always the same as the one you end up speaking to.  Then I put the time of the call with these.  They always say calls are recorded so it makes it easy for them to check that you are telling them the truth.  Then if they have made a mistake you can often get them to change things.

At least thisoldbird has not lost out financially  here from being given incorrect info....apart from being inconvenienced. 

"My anger is being told the wrong facts..the very department that should surely give correct information.  That's all!! "

My experience of the "advisors" on the HMRC (no) Helpline is often that I have to advise them what the rules and regulations are. 

1 to 16 of 16rss feed

Do you know the answer?

Tax On Pensions

Answer Question >>