taxing my pension

ozh

I retired in Jan 2005 after 50 years in engineering,i received my state pension +serps which made me £205 per week in addition i got £100 a month off 2 small private pensions i had saved hard for 18 years one £70 tthe other £30 in April 2005 the inland revenue started to stop me £30 a month tax which they said was the maximum they could stop by law
Earlier this year they sent a couple of tax code notices one which stated i was earning £32000 a year,after numerous phone calls they decided i should self assess which i did, i have little savings which gave very small interest
I have received notice that i owe them £1458 in tax{£545 from 2004/2005 and in future will owe them about £64 a month
I would be very grateful if anyone could give me any adivice on how i could reduce this monthly amount
Hoping someone can oblige,many thanks in advance

CIS

I dont think theres anything you can really do to reduce the tax as its due on money thats being paid in your name.

ozh

many thank CIS
it was just a thought,i just felt like many people that after 50 yrs of paying tax, my state pension would have been tax free- ah well this is England
after all
ONCE AGAIN MANY THANKS

Andy_L

Seeing as how the personal allowance is just over 5k and the state pension is a bit under 4.5k it is tax free

CIS

Seeing as how the personal allowance is just over 5k and the state pension is a bit under 4.5k it is tax free

Thats only the basic pension though, throw in the SERPS and its well over the tax threshold.

EdInvestor

I assume ozh is getting the age allowance ( payable from age 65), which boosts the personal allowance to around 7,200, plus on top of that there is the 10% band, accounting for another c.2000 quid.The rest will be on basic rate tax of 22%.

The cause of the "trouble" is ozh's mighty state pension of 10,660, 205 quid a week.Just shows how valuable Serps/S2P can be, especially when you take into account that is an inflation-linked pension at full RPI.

It would cost you 200,000 quid in savings to buy that pension on the open market these days. :eek:

dunstonh

It would cost you 200,000 quid in savings to buy that pension on the open market these days.

More like 100k.

It is quite possible that he would have been financially better off contracted out (if you assume a post A day 25% lump sum on contracted out benefits). Pension credit would have made up the bulk of the shortfall and the lump sum could have been placed into an investment bond to avoid being included in a means test. Too late now but others reading may not be too late.

isasmurf

Request from Board Guide
I can see where this thread is going. Before it does...
Please can we not get into the SERPs/S2P contracting in/out debate here, it has been done to death on other threads and isn't what the OP asked about.

Many thanks in advance

krisskross

ozh wrote:

I retired in Jan 2005 after 50 years in engineering,i received my state pension +serps which made me £205 per week in addition i got £100 a month off 2 small private pensions i had saved hard for 18 years one £70 tthe other £30 in April 2005 the inland revenue started to stop me £30 a month tax which they said was the maximum they could stop by law
Earlier this year they sent a couple of tax code notices one which stated i was earning £32000 a year,after numerous phone calls they decided i should self assess which i did, i have little savings which gave very small interest
I have received notice that i owe them £1458 in tax{£545 from 2004/2005 and in future will owe them about £64 a month
I would be very grateful if anyone could give me any adivice on how i could reduce this monthly amount
Hoping someone can oblige,many thanks in advance

Sorry mate this is the way it is.....I also have to pay income tax on pension. In your case as you are over 65 your personal tax allowance to set against income is £7280. Therefore you have approx £4500 a year income on which income tax is due. the first couple of thou will be taxed at 10p in the pound , the rest at 22p in the pound. Nothing to be done about it, the Chancellor will have his pound of flesh even out of a hard earned pension.As I am not yet 65 I have only the normal tax allowance so pay a lot of tax. Criminal really, I wonder if it has truly been of benefit to have saved all those years.

seven-day-weekend

My husband pays tax on his Teachers's Pension and doesn't even get his State Pension yet!

He has just over £7k in Teachers Pension, plus Incapacity Benefit of £2400, his tax code is only £172T and he pays nearly £80 pcm on his pension.

ceebee_2

Just a reminder that OAP's should apply to recieve their old age pension weekly (i.e. in advance), as opposed to monthly (in arrears). I appreciate that "monthly" means every 4 weeks.:beer: