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How to find annual state pension income for tax purposes?
kulath
Posts: 45 Forumite
If I am employed, I get a P60 End of Year Certificate showing my taxable income for the tax year, which I can use to calculate, check and report on my tax for the year.
I don't think I get a P60 for my state pension, so how do I verify exactly how much I received in the tax year? Do I have to add up all the payments myself? I suppose that the amount received in the tax year will not necessarily be the quoted yearly pension, because the pension is paid every four weeks, and this will not necessarily coincide with the tax year. (No doubt someone will be able to tell us which years have one extra or one fewer payment?). And do I really have to rely on my possibly incorrect calculation, instead of getting an irrefutible statement from the government?
I can't find any mention of how this is supposed to work on any websites - of course they all assume at most one extra source of income apart from the state pension (which will rarely be the case now).
I don't think I get a P60 for my state pension, so how do I verify exactly how much I received in the tax year? Do I have to add up all the payments myself? I suppose that the amount received in the tax year will not necessarily be the quoted yearly pension, because the pension is paid every four weeks, and this will not necessarily coincide with the tax year. (No doubt someone will be able to tell us which years have one extra or one fewer payment?). And do I really have to rely on my possibly incorrect calculation, instead of getting an irrefutible statement from the government?
I can't find any mention of how this is supposed to work on any websites - of course they all assume at most one extra source of income apart from the state pension (which will rarely be the case now).
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Comments
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Why not just add up the 12 or 13 payments that fall within the tax year, using your bank statements?0
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I don't think I get a P60 for my state pension, so how do I verify exactly how much I received in the tax year?
Use your bank statement. The figure usually only changes once a year so you have x number of months with one amount and y number of months at another.And do I really have to rely on my possibly incorrect calculation, instead of getting an irrefutible statement from the government?
Yes. It would be totally pointless issuing a document each year telling you something that takes you 2 minutes to find out. That would have to be paid for and would you rather have the money in your bank or the state pension reduced to pay for unnecessary admin.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
sleepless_saver wrote: »Why not just add up the 12 or 13 payments that fall within the tax year, using your bank statements?
The state pension is given as a pw figure and pd weekly, fortnightly or 4 weekly. These figures are either 1,2 or 4 times the weekly rate. It is, therefore, possible, to receive either 12 or 13 payments in a tax year and HMRC may not know which.
Coding notices appear to use an annual pension but is this always the amount received in a tax year?The only thing that is constant is change.0 -
zygurat789 wrote: »The state pension is given as a pw figure and pd weekly, fortnightly or 4 weekly. These figures are either 1,2 or 4 times the weekly rate. It is, therefore, possible, to receive either 12 or 13 payments in a tax year and HMRC may not know which.
Coding notices appear to use an annual pension but is this always the amount received in a tax year?
Interesting.
I'm helping a relative at the moment who has become 65 this tax year.
The HMRC have clearly adjusted his tax code based on receivng the state pension on a weekly basis although he actually receives it on a 4 weekly basis so he is being taxed a little too highly.
In his case the difference amounts to one weekly state pension payment.
The matter is currently unresolved and awaiting a reply to a letter.0 -
Do I have to add up all the payments myself? I suppose that the amount received in the tax year will not necessarily be the quoted yearly pension, because the pension is paid every four weeks, and this will not necessarily coincide with the tax year.
The State Pension is taxed on an accrual not a payment basis. So you're taxed on what you're entitled to in the year. Which will not be the same as you're paid - if you have any payment method other than weekly.
If HMRC restrict your coding to recover the tax on the State Pension. Then DWP provide an annual uprated figure to HMRC for that purpose .... once the pension increase is known and before the bulk issue of Coding Notices which starts in Jan / Feb.If you want to test the depth of the water .........don't use both feet !0 -
The HMRC have clearly adjusted his tax code based on receivng the state pension on a weekly basis although he actually receives it on a 4 weekly basis so he is being taxed a little too highly.
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See my overlapping reply. The Coding out is based on elapsed time from the date the Pension is payable. The frequency of payment can't be a factor ..... as that would simply be unworkable.
Unless you work to fine tolerances
..... the differential is usually unnoticed. Unless - your birthday happens to be within 4 weeks of 5th April and you opt for 4 weekly payment? When the first thing you get from HMRC is a coded out underpayment for the closing year ..... when you have had no payment! Feels very odd.
HMRC are immovable on it ...... simply as the State Pension (as most pensions) is taxed when the entitlement arises.If you want to test the depth of the water .........don't use both feet !0 -
See my overlapping reply. The Coding out is based on elapsed time from the date the Pension is payable. The frequency of payment can't be a factor ..... as that would simply be unworkable.
Unless you work to fine tolerances ..... the differential is usually unnoticed. Unless - your birthday happens to be within 4 weeks of 5th April and you opt for 4 weekly payment? When the first thing you get from HMRC is a coded out underpayment for the closing year ..... when you have had no payment! Feels very odd.
HMRC are immovable on it ...... simply as the State Pension (as most pensions) is taxed when the entitlement arises.
thanks for that
as I understand it new pensioners have no choice other than 4 weekly0 -
as I understand it new pensioners have no choice other than 4 weekly
Didn't realise that. And that will always create a discepancy between 'coded out' and 'paid' .... particularly noticeable in the 1st year.
There was a thread on the Cutting Tax forum a few weeks ago that led into the annual uprating service that DWP provide to HMRC in order to get the 'coded out' values spot on.
In just attempting to find that .... I came across this on the HMRC site which covers the bits under discussion here more precisely? :
http://www.hmrc.gov.uk/manuals/eimanual/EIM76005.htm
(final para)If you want to test the depth of the water .........don't use both feet !0 -
sleepless_saver wrote: »Why not just add up the 12 or 13 payments that fall within the tax year, using your bank statements?
Remembering one of them may include the non-taxable Christmas bonus0 -
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