State Pensions

jennifernil

Yes, that is what I have now done, all 52 payments were for the same amount.

Mine (now submitted) is not a full return, just an R40 to reclaim the tax, so I haven't got that worksheet. My husband probably has one, but I haven't looked at his yet!

jimmo

jennifernil wrote: »

Reading your example nearly sent my brain into meltdown!

Writing all that out didn’t do my brain a lot of good either.

I spotted this today.

http://www.hmrc.gov.uk/manuals/pommanual/PAYE76030.htm

That is not exactly consistent with what happens in your case (paid weekly in advance) nor my wife’s (paid fortnightly in arrears) but it does reflect the concept of 1 week at the old rate and 51 weeks at the new.

As you say, this is not going to make any difference to your repayment, and whilst there can be no guaranties, HMRC really shouldn’t be concerned if your figure is slightly different to any reports from the Up-rating Service.

Even in your husband’s case, his SA Return will, if anything, show very slightly more pension than the Up-rating service and HMRC really shouldn’t be too bothered by that.

As regards you being paid on 5 April instead of 9 April there is something of a parallel for employers operating PAYE.

See “
Example - regular payday and actual payday cross a tax year:” here.

http://www.hmrc.gov.uk/paye/payroll/paydays/non-banking-day.htm

I think what you have done is fine.

System

Isn't the employers scenario different? I thought earnings were taxable on the receipts basis rather than accrual/entitlement basis. In OP's case even though payment is received 2011-12 it's part of their 2012-13 entitlement. Unless I've misunderstood it, their entitlement date didn't change, just the date of receipt.

xylophone

http://www.hmrc.gov.uk/manuals/eimanual/EIM74101.htm

EIM74101 - Amount of pension income charged to tax

The amount of taxable pension income is determined by reference to the relevant Chapter of ITEPA 2003 that applies to the pension or annuity in question. In many cases, the taxable pension income for a tax year is the amount accruing in that year irrespective of when any amount is actually paid. Where accruals basis applies, the pension, etc. should be assessed on the amounts that the pensioner is entitled to in the tax year

Pensioners are often content to pay income tax on the amount received in a year, as, in most years the amounts accruing and received are similar. However, it is possible in certain circumstances for the amounts to be different. If a taxpayer requests the statutory basis this should be accepted.

The following table shows how to find the amount of taxable pension income for different categories of pension income.

Type of income

Amount taxable

United Kingdom pensions (see EIM74003) Full amount accruing in the tax year
Foreign pensions See EIM74500
United Kingdom social security pensions Full amount accruing in the tax year (see EIM74600)

jimmo

ceiberman wrote: »

Isn't the employers scenario different? I thought earnings were taxable on the receipts basis rather than accrual/entitlement basis. In OP's case even though payment is received 2011-12 it's part of their 2012-13 entitlement. Unless I've misunderstood it, their entitlement date didn't change, just the date of receipt.

You are, of course correct. Employees are assessable on the receipts basis, pensioners are assessable on the accruals basis.

For employees, the receipts basis is pretty much set in stone these days but the HMRC Instructions to its own staff regarding state pension do seem a little woolly.

Looking at xylophone’s quotation in bold it seems to be saying that if a taxpayer declares State Pension on the receipts basis, that’s OK but if the taxpayer chooses to declare on the accruals basis, that’s OK too.

Now that’s inconsistent, but in HMRC terms, the difference is pretty minor.

So, by there own words, HMRC are content to see State Pensions declared on the receipts basis.

That is why I attempted to draw a parallel with employers operating PAYE.

If it is acceptable to HMRC for jennifernil to declare her State Pension on the receipts basis it really should be acceptable to HMRC for her to regard the payment received early on 5 April, as being received on her normal payday of 9 April.