How is my wife's pension taxed?

pineman100

Hi from a first-time poster.

I am 63 and retired, living on a private pension of about £14k. My wife reached 60 last February and has started receiving her state pension of about £6k.

I have several questions relating to our tax position - can I apologise for my ignorance in having to ask them!

1. I don't think my wife's pension is taxed at source - is this correct?
2. If that is correct, how do I declare her pension on my tax return?
3. I presume it is best if we elect to be taxed separately? If so, can you please tell me what eacxh of us gets as a tax-free personal allowance?

Many thanks for any and all help!

CIS

State Pension isn't taxed at source, if her income is over the tax threshold she is responsible for completing a tax return.

As I understand it,

You will each be taxed as seperate inividuals at £4895, when a person gets to 65 they have a higher allowance and again at 75.

The section regarding taxbale state benefit sis in the main section of tax return, I doubt she will need to complete any of the optional add on sections.

Heres an old form , this yrs should be near enough the same.

http://www.hmrc.gov.uk/saemployees/fagsa100.shtml,

you need page 4


You will need to ocntact HMRC and request that they send out a tax return

margaretclare

Hi

Women have had their own tax allowances, own tax affairs dealt separately from their husbands, since the mid-1980s.

Income tax allowances 2005-06 2006-07
Personal allowance £4895 £5035
Personal allowance for people aged 65-74
£7090 £7280

If your wife is getting approx £6K a year then her income will be above the basic tax allowance of £4895 and she will need to complete her own tax return. You do NOT declare her income on your return - she declares her own!!

I assume you're not getting married people's tax allowance - too young for that? We get it because B was born before April 1935, and we split it between us.

HTH

Aunty Margaret

pineman100

Many thanks for all that, Aunty.

As Mrs Pineman's pension didn't start until February last year, she only got one payment of about £500 within that tax year. Is it therefore OK to ignore this for tax purposes, or does she still have to complete a tax return for that year?

ctm_2

pineman100 wrote:

Many thanks for all that, Aunty.

As Mrs Pineman's pension didn't start until February last year, she only got one payment of about £500 within that tax year. Is it therefore OK to ignore this for tax purposes, or does she still have to complete a tax return for that year?

Assuming that it was her only income in the year, then yes, just ignore it.

It will probably be worth ringing up a tax office and discussing with them re your wifes pension. What will probably happen is that she will be required to complete a self assessment tax return each year (and will most likely get the new short one) so that the tax can be collected on her state pension. It really isn't as daunting as it sounds though. If you've not done a tax return before, then don't worry. When you get the form, just take it in to your local tax office with an enquiry centre with a statement showing how much state pension your wife got in the year, and any other income (e.g bank interest) andthey will show you what to do.

sarahlouise210

margaretclare wrote:

Hi

Women have had their own tax allowances, own tax affairs dealt separately from their husbands, since the mid-1980s.

I/QUOTE]

Independent taxation started in the 1990 -91 tax year.;)

I agree with the rest of the advice - your wife wil need to complete a short Self Assessment form each year and pay the tax due by 31st January following the end of the tax year.

margaretclare

sarahlouise210 wrote:

margaretclare wrote:

Hi

Women have had their own tax allowances, own tax affairs dealt separately from their husbands, since the mid-1980s.

Independent taxation started in the 1990 -91 tax year.;)

I agree with the rest of the advice - your wife wil need to complete a short Self Assessment form each year and pay the tax due by 31st January following the end of the tax year.

Sorry about the mistake in the dates. It was at some General Election in the mid- to late-1980s that I spoke to the then Chancellor (think it was Nigel Lawson) on 'Election Call' about this, and it got changed following them winning that election. A group of us had been lobbying for this over 20 years or so - I had correspondence going back to the 1960s and it was always an annoyance that my husband could be written to by the Tax Office about MY tax!

Mr Pineman, the Tax Office may refuse to speak to you about your wife's tax affairs. She's gonna have to do this for herself. ctm says this:

It will probably be worth ringing up a tax office and discussing with them re your wifes pension. What will probably happen is that she will be required to complete a self assessment tax return each year (and will most likely get the new short one) so that the tax can be collected on her state pension. It really isn't as daunting as it sounds though. If you've not done a tax return before, then don't worry. When you get the form, just take it in to your local tax office with an enquiry centre with a statement showing how much state pension your wife got in the year, and any other income (e.g bank interest) and they will show you what to do.

Instead of saying 'you' need to go to the tax office and they'll show 'you' what to do, it's Mrs Pineman who needs to do all of this for herself! 'You' can't do it for her.

Aunty Margaret

ctm_2

margaretclare wrote:

Mr Pineman, the Tax Office may refuse to speak to you about your wife's tax affairs. She's gonna have to do this for herself.
Instead of saying 'you' need to go to the tax office and they'll show 'you' what to do, it's Mrs Pineman who needs to do all of this for herself! 'You' can't do it for her.

Well, he can actually do it all for her. All that is needed is for her to sign a letter giving you authority to act on her behalf on all tax matters, then you can do it all for her. She can give this auhority as a one off over the phone by ringing up saying that she gives authority for you to talk to them, then pass the phone to you. However, doing it in writing will allow you to ring up without having to do that each time, and for you to send in letters etc if you want to.

Alternatively your wife may want to do it all herself!

sarahlouise210

ctm wrote:

Well, he can actually do it all for her. All that is needed is for her to sign a letter giving you authority to act on her behalf on all tax matters, then you can do it all for her. She can give this auhority as a one off over the phone by ringing up saying that she gives authority for you to talk to them, then pass the phone to you. However, doing it in writing will allow you to ring up without having to do that each time, and for you to send in letters etc if you want to.

Alternatively your wife may want to do it all herself!

The tax office should not discuss any part of anyones tax affairs without written authority. If they discuss matters on the phone following phone authority only then they are breaking the rules! It does happen, but it is not standard practice and you could not demand it.

Aunty Margaret ... very interesting indeed! Quite right to lobby for independent taxation - hooray for it!!

margaretclare

sarahlouise210 wrote:

The tax office should not discuss any part of anyone's tax affairs without written authority. If they discuss matters on the phone following phone authority only then they are breaking the rules! It does happen, but it is not standard practice and you could not demand it.

This is absolutely right. Once those changes had taken place then the old idea of a husband and wife's tax affairs being dealt with as one (under the husband's name) went completely out of the window.

Aunty Margaret ... very interesting indeed! Quite right to lobby for independent taxation - hooray for it!!

Thank you for this - it was one of those minor issues that we older feminists felt strongly about and we fought and won it. But it took time and effort over many years! We quoted the Married Women's Property Acts of the 1880s under which a woman's earnings, income of any kind, was her own. (Up to then, if a woman had her purse stolen, her husband had to pursue the matter through the police, because legally a woman owned nothing at all!)

However, the Inland Revenue laughed at me and at others of us because they said the Married Women's Property Acts did not apply - if a woman was earning money in her own right then 'for tax purposes' it wasn't hers but her husband's. Hard to believe now, isn't it!

I've always worked and earned in my own right, and now I receive pensions income in my own right too. B and I are not what the Chancellor is pleased to call a 'pensioner couple' because I don't get SRP through his contributions (in which case I'd get 60%) - I get full SRP plus some SERPS through my own contributions.

Aunty Margaret