retired and still pay tax...rip off

webbit

Its amazing to hear the PM go on about saving for retirement, here is what happens.....

Your tax code is 10500 state pension is 6000 approx, well my father saved up for his retirement and has a private pension of £8000 approx.

So what happens is the government take off the state pension from your tax code, so that goes down to 4500, my earnings are £14000 so he pay tax on 9500!! he is 69.

Why bother saving up you should keep it under your mattress from 55 years old.

rip off Britain

Linton

webbit wrote: »

Its amazing to hear the PM go on about saving for retirement, here is what happens.....

Your tax code is 10500 state pension is 6000 approx, well my father saved up for his retirement and has a private pension of £8000 approx.

So what happens is the government take off the state pension from your tax code, so that goes down to 4500, my earnings are £14000 so he pay tax on 9500!! he is 69.

Why bother saving up you should keep it under your mattress from 55 years old.

rip off Britain

Bizarre and very confused!! You seem to be taking state pension income off the tax code and then applying the tax code to his total income. That isnt how it works, to get the right answer you do one or the other, not both.

If your father gets £6K state pension and £8K private pension he has an income of £14K. If there is a £10500 tax allowance he pays tax on £3500. Bearing in mind that his payments into his private pension were tax deductible it seems only reasonable that he pays that tax when he actually draws the money.

thenudeone

Post 2 is correct in every respect.

The funds in the pension came from income which wasn't taxed at the time. At retirement, 25% can be taken tax free and the rest (up to the amount of any spare personal allowance) is tax-free as well.

It doesn't sound like too bad a deal to me. I wish all other taxes could be eliminated or deferred for several decades just as easily

CannySaver_2

webbit wrote: »

Why bother saving up you should keep it under your mattress from 55 years old.

rip off Britain

Why shouldn't a pensioner pay tax? Given the age related allowance they start to pay tax later than everyone else.

Furthermore, keeping money under the mattress? One word....inflation

dunstonh

Why bother saving up you should keep it under your mattress from 55 years old.

You pay tax on what you earn or receive. having it under the mattress gives you nothing. So, why do you think it is better to pay £0 tax on £0 earnings compared to getting 80% of the net income on the amounts received? (probably equates to much less than 20% after personal allowance is taken into account).

atush

I think you should be happy he earns enough to pay tax- many don 't. and in any case, he is only paying tax on 3500 worth of income.

Didn't he take his 25% Tax free lump sum?