My Parents Pensions and Tax letters

question21

Hi everyone,

There must be a point in every sons or daughters life’s where you have to start looking after your parents paper work.

The time for me has come and it’s all very confusing.

They received a Tax credit review letter say their income should be between £12282 and £22282 for the 2011 and 2012 period.

As my mum not been working for years, and my dad stopped working in June 2011.

They get £210.30 a week of pension credit.

My Question are:

Pension credit is class an income?
Is pension credit taxable?

Also, my Dad has a private pension. He gets £494.41 a year.
However, £98.80 is taxed as income tax. Is this correct?

Hope someone can help me understand this paper work nightmare.

Thanks,

molerat

PC is not taxable. http://www.hmrc.gov.uk/incometax/taxable-income.htm

The pension is being taxed at BR which may be incorrect as other income is too low. Without all the figures it is not possible to give an accurate answer.

xylophone

http://www.hmrc.gov.uk/pensioners/pension.htm
http://www.direct.gov.uk/en/moneytaxandbenefits/taxes/index.htm
http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm- see if this applies to your parents - the examples use old allowance figures so see
http://www.hmrc.gov.uk/rates/it.htm

question21

Thanks for the links.

For the pension - how can I work out if the Basic Rate (BR) is incorrect?

My dad stopped working at the end of June 2011 and the tax code on the P45 was 747L.

Is this code still valid?

Thanks,

molerat

http://www.hmrc.gov.uk/rates/it.htm

His tax code should be his personal allowance - state pension.

sleepless_saver

question21 wrote: »

They get £210.30 a week of pension credit.

Some of this "pension credit" is likely to be state pension which is taxable. They should have award letters somewhere which show the actual amounts of state pension and pension credit.

Add together his state pension (not your mother's) and his other pension and feed the figures into https://www.listentotaxman.com to get the amount of tax he should be paying (which is very likely to be £0). Don't include the pension credit. If it's not what he has paid, then the code is wrong and he should contact HMRC to get a refund and get the code corrected.

question21

Thanks guys...all very good information!