State pension wrong in Notice of Coding ?

crunchie1

[FONT=Verdana, Helvetica, Arial]I am helping an elderly relative fill in an R40 tax reclaim form for the year to April 2011.

The Notice of Coding she received last Spring for the year to April 2011 gives her State Pension as £7964, but the pension letter received the same weeks shows it as £160.54 (£8348 per year). That is what she actually received.

The Notice of Coding she received this Spring gives her State Pension as £8326, but the pension letter received the same weeks shows it as £167.64 (£8717 per year). This is the amount they are paying her.

I have just checked the letter which came with her rebate for the year to April 2010, and it shows her State Pension as £7774. But I have records of the numbers I sent them, and I had the State Pension as £8381, which I have verified from bank statements. So they changed it in their calculation back to the number on that year’s Notice of Coding.

Am I missing something obvious ? I can’t see how they could have it wrong 3 years in a row, and each pair of numbers issued in the same week. There are no other benefits involved, although she does also receive Attendance Allowance (non taxable) at the lower rate. This is shown correctly.

If they have made a mistake will she have to repay the difference for last year, despite submitting the correct figures to them, and them editing them ? And she was presumably being under-taxed last year, and this year too. She was expecting a small repayment of tax paid on bank interest, not a bill !

But I don’t see how their computer could hold 2 values for the same pension, same person. Does anyone have an explanation ? I am fairly sure that in previous years the figures agreed, but don’t have the paperwork to prove it anymore.[/FONT]

System

Check the letters from DWP which will show the date when the new state pension amount starts to be paid. If the first payment at the new amount only starts a couple or so weeks after the 6 APR, then to calculate the annual amount, you need to use the previous year's amount for the appropriate number of weeks and then use the new amount for the remaining number of weeks for the tax year, taking into account if there are 52 or maybe 53 weeks in the year.

Since DWP supply HMRC with the state pension amount, it's a shame that they do not include the annual amount for tax purposes on the letter they send to pensioners, then everyone would be able to easily use the same amount, but that would need joined up thinking by the relevant government departments

Pennywise

My understanding that DWP only tell HMRC when a state pension starts, and then for each year after HMRC simply applies the across-the-board annual increase. So if it's wrong one year, it will be wrong every following year, because all HMRC do is take last year's and add the appropriate percentage increase. That's certainly what a tax inspector told me when I queried it for a client of mine. You need to send a copy of the pension notification letter to HMRC and ask them to check their records and amend if necessary.

Just had another thought - is all the "pension" taxable? Sometimes, they include other things, like carer's allowance which isn't taxable - have a look at the notification letter - it will give a breakdown of how the state pension amount is made up.

crunchie1

Thank you for the replies. I will have to write to the tax office then before the shortfall escalates.


I am still baffled though as to why, when I submit the R40 each year, they ignore the figure I give them, and go back to their old incorrect one.

They use all my other numbers to set the assumptions for the following year.

I have checked the breakdown, there is no Carer's Allowance or other benefit.