State Pension

Norkie said:
Good question?
But, I really cannot believe that the current government is going to allow the state pension to taxed. At the very least the personal allowance will be increased to at least the state pension level.
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dunno I wouldn't bet on it remember only the difference is taxed so if what you get is £500 over your allowance its £100 in tax
it would be difficult to justify not taxing the SP yet taxing the general public.
 
Mr Bump said:
According to Google AI , HMRC will send you a simple tax assessment based on your reported other income (Private Pension etc) and what what have paid you in state pension.

  • If the state pension is your only income: For the 2025/26 tax year, the full new state pension (£11,973 annually) is just below the £12,570 personal allowance. If the state pension is your only income, you likely will not owe any tax. However, if other taxable income (such as savings interest) pushes you over the personal allowance, or if your state pension amount alone exceeds it, HMRC will send you a Simple Assessment tax bill after the tax year ends.
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I will ask my BIL how his is done now, he is already over the tax free amount
 
leaky5 said:
I will ask my BIL how his is done now, he is already over the tax free amount
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I assume he has a private pension as well as a SP, private pensions are taxed at source based on your tax code (mine is already I am taking mine now at 56) he will then get paid his SP gross (untaxed) at the end of the tax year HMRC will do the sums and send a simple tax assessment to him, it will probably just say they (HMRC) will adjust his tax code down for the next year so they re-coup the unpaid tax, or they might just give him the option to pay the tax, that figure will be detailed on the return.

one thing to remember you can only use your tax allowance against one employment/earning stream and your private pension will use it it automatically so if you say get £10k on your private pension you lose the other £2.5k allowance. The only way you get that back is via the end of year assement when all the numbers come together.
 
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Mr Bump said:
I assume he has a private pension as well as a SP, private pensions are taxed at source based on your tax code (mine is already I am taking mine now at 56) he will then get paid his SP gross (untaxed) at the end of the tax year HMRC will do the sums and send a simple tax assessment to him, it will probably just say they (HMRC) will adjust his tax code down for the next year so they re-coup the unpaid tax, or they might just give him the option to pay the tax, that figure will be detailed on the return.

one thing to remember you can only use your tax allowance against one employment/earning stream and your private pension will use it it automatically so if you say get £10k on your private pension you lose the other £2.5k allowance. The only way you get that back is via the end of year assement when all the numbers come together.
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Are you sure on the last paragraph? I spoke to HMRC a few weeks ago and they said I could split my allowance over my job (approx £10k pa and my pension ) and my dads was split over 2 pensions
 
If your only income is from a private pension and it's below the tax threshold, will tax still be taken at source, and you claim it back later, or will the HMRC tell the pension company not to take tax.
 
leaky5 said:
Are you sure on the last paragraph? I spoke to HMRC a few weeks ago and they said I could split my allowance over my job (approx £10k pa and my pension ) and my dads was split over 2 pensions
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That sounds right to me if the tax allowance is £12500, and your only income is 2 pensions paying £6K each, I would think you pay no tax.
 
HMRC have given my pension company a tax code for me and another one to my work
 
leaky5 said:
HMRC have given my pension company a tax code for me and another one to my work
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ah ok, my error then i asked my accountant this a few years ago, must have been changed,
 
Delphin said:
If your only income is from a private pension and it's below the tax threshold, will tax still be taken at source, and you claim it back later, or will the HMRC tell the pension company not to take tax.
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if the income from the pension is below your tax code then your pension company will not deduct any tax
 
one thing to also bear in mind and Martin Lewis bangs on about the married person tax allowance adjustment.
if one of you earns below the tax allowance and one earns above you can ask the HMRC to transfer 10% to the other persons tax code
I have done that myself and grabbed 10% from my wife so my tax code is now 1383M
 
One anomaly has just emerged with the raising of the state pension age to 67.
If you turn 66 after next April you won't betting a national free bus pass at the same time you get your state pension.
That will have to wait until you reach 67 because the bus pass is tied to the pension age, but not necessarily yours in this case,
 
tijuana taxi said:
One anomaly has just emerged with the raising of the state pension age to 67.
If you turn 66 after next April you won't betting a national free bus pass at the same time you get your state pension.
That will have to wait until you reach 67 because the bus pass is tied to the pension age, but not necessarily yours in this case,
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I can get a bus pass next year from 66 and one month which is my state pension age.
 
Mr Bump said:
one thing to also bear in mind and Martin Lewis bangs on about the married person tax allowance adjustment.
if one of you earns below the tax allowance and one earns above you can ask the HMRC to transfer 10% to the other persons tax code
I have done that myself and grabbed 10% from my wife so my tax code is now 1383M
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That’s good to know. Until we reach SP age, my wife’s pensions will be well under tax allowance, where as mine will probably be over it. So I will look into pinching that for a few years
 
In Wales you get a bus pass at age 60 , use it a lot as well, much less hassle than trying to find parking
 
LCPete said:
In Wales you get a bus pass at age 60 , use it a lot as well, much less hassle than trying to find parking
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Agreed, we use ours as often as possible, save a fortune on fuel! I think in the last year we bought less than £1000.00 of diesel :)
 
leaky5 said:
That’s good to know. Until we reach SP age, my wife’s pensions will be well under tax allowance, where as mine will probably be over it. So I will look into pinching that for a few years
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its easy to do online takes about 10 mins and your pension company automatically gets updated
 
Norkie said:
Agreed, we use ours as often as possible, save a fortune on fuel! I think in the last year we bought less than £1000.00 of diesel :)
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Oh yes there is the savings on petrol too
Mainly only use the car when I’m out with the camera
 
LCPete said:
In Wales you get a bus pass at age 60 , use it a lot as well, much less hassle than trying to find parking
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Same in Scotland, you can apply for an over 60 bus pass which gets you free travel on almost all buses. Just a shame the bus service in our village is pitiful.
 
We live in Attleborough in Norfolk. The bus and train service is brilliant. We can hail a bus between stops and the driver will stop and pick you up!
 
Fiscal drag will kick in in TY 2027/28 unless the Government act early to avoid the State Pension being dragged over by increasing the Personal Allowance of £12,570

Next year 26/27 TY based on the projection of a 4.8% increase in SP we will get £12,547 leaving just £23 headroom of tax free money.

On the surmise of a 3% increase next time (27/38) that would make the SP £12,922 and that will mean there will be 20% tax to pay on £352..... alright only £70.40 tax but to someone relying entirely on their SP that will challenging!

For those of us with our own additional private pensions I suspect the tax on the SP element will be taken off of our private pensions i.e. taxed based on ones total income.
But how those on only the SP would taxed is anyones guess ?
 
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Various posts above refer to letting HMRC decide what you need to pay tax on and how much. I don't trust them to get it right - I've worked in HMRC IT briefly.
Do a tax return. It's really easy online just loading in the numbers and letting it be calculated. The resulting tax calculation is easy to verify too.
 
I can’t imagine HM Gov will adjust the tax band just for pensioners’ benefit. The personal tax limit is frozen till 2028 thanks to Rishi & Co. No doubt Rachael will be shifting the blame onto them while grabbing the extra tax income.
 
The vast majority of those who have yet to reach pension age will be paying income tax.
There's income from your Private/Company pension, you will also get a lump sum, now that comes tax-free, but depending on where you put it there will be tax on the interest it makes. You don't need huge amounts of money to break that £1000 tax-free interest limit.

As I understand it, the tax you pay on savings interest is taken via your tax code, meaning it will affect your monthly income even when the saving interest is only paid annually.
If possible, you really do need to use the full ISA limits or other ways of lowering the tax on savings and investments.
 
Mr Bump said:
one thing to also bear in mind and Martin Lewis bangs on about the married person tax allowance adjustment.
if one of you earns below the tax allowance and one earns above you can ask the HMRC to transfer 10% to the other persons tax code
I have done that myself and grabbed 10% from my wife so my tax code is now 1383M
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As I understand this is only possible unless you pay tax at a higher than standard rate, may have changed but worth checking.
 
mj4456 said:
As I understand this is only possible unless you pay tax at a higher than standard rate, may have changed but worth checking.
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oh I did it a few months ago mate its not a tax thing all you do is get the person who wants to give it away to apply.
and bam your code gets adjusted
 
lindsay said:
Various posts above refer to letting HMRC decide what you need to pay tax on and how much. I don't trust them to get it right - I've worked in HMRC IT briefly.
Do a tax return. It's really easy online just loading in the numbers and letting it be calculated. The resulting tax calculation is easy to verify too.
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it is quite easy to be fair, i did one for last year as I switched from PAYE form my LTD company to drawdown and ended up overpaying some tax, did a quick online self assessment and i got my 600 quid back in my account in a week.
 
Mr Bump said:
oh I did it a few months ago mate its not a tax thing all you do is get the person who wants to give it away to apply.
and bam your code gets adjusted
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Sure we were gonna do this but due to my taxation being in the higher rate it could not be transferred.

www.gov.uk

Marriage Allowance

Marriage Allowance allows you to transfer some of your Personal Allowance to your husband, wife or civil partner: what you get and how to apply for free.
www.gov.uk www.gov.uk
 
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mj4456 said:
Sure we were gonna do this but due to my taxation being in the higher rate it could not be transferred.

www.gov.uk

Marriage Allowance

Marriage Allowance allows you to transfer some of your Personal Allowance to your husband, wife or civil partner: what you get and how to apply for free.
www.gov.uk www.gov.uk
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ah so if you are in the higher tax brand you can't do it ?
that oddly makes sense as you would benefit for that amount very well indeed.
 
Delphin said:
If your only income is from a private pension and it's below the tax threshold, will tax still be taken at source, and you claim it back later, or will the HMRC tell the pension company not to take tax.
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My private pension is just below the std allowance and i my only income. HMRC do not tax me on it. They. did tax it the first month I got it, but after one phone call, that was sorted and they paid me back what they took.
 
vintageman said:
pensioners over 80 years (presumably on the older lower SP) get an additional increment. However at 25pence per week it hardly helps them keep warm!
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That's just never been raised since it's introduction in 1971, with inflation it should be £3.18
 
Just had mail from HMRC drop through the door, after a tax rebate for 23/24 earlier this year they’ve now decided I’ve underpaid by £500+ and will recover this 25/26, Ive had 3 tax code changes this year and now the winter fuel payment which will be paid and then require repayment giving them yet another chance to mess up, the Scottish government don’t help by having more tax bands than the rest of the UK.
I should be grateful my retirement income is enough to trigger tax problems but the amounts are steady throughout the year unlike wages that might vary, should make life easy for the taxman!
 
But don't forget, the Xmas Bonus is not subject to tax - all £10 / year of it.
 
Don't spend it all at on... Oh! You already have!!!
 
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