Tax on pension?

wwp8

Hi, I was wondering if anyone can assist me,

My dad is required to fill in a self assessment tax form every year, what I don't know is, if he is not working, retired since 9 years ago, why does he need to fill one in and why does he require to pay tax.

My dad is 74 (75 in Feb) is retired and currently have a state pension £121.79 per week and a personal one from Sun life paid £95.88 per month.

The pension from Sun life as far as I know pays tax. there is a a monthly 'certificate of tax deduction' certificate and it mentions tax code 399P.

Any help/advise would be appreciated.

Thanks

jem16

wwp8 wrote: »

Hi, I was wondering if anyone can assist me,

My dad is required to fill in a self assessment tax form every year, what I don't know is, if he is not working, retired since 9 years ago, why does he need to fill one in and why does he require to pay tax.

Normally someone of that age is required to complete a tax return if they are over the age allowance limit for the higher personal allowance. On the figures you give this doesn't seem to apply to your Dad. Has he any other income from savings or investments?

My dad is 74 (75 in Feb) is retired and currently have a state pension £121.79 per week and a personal one from Sun life paid £95.88 per month.

The pension from Sun life as far as I know pays tax. there is a a monthly 'certificate of tax deduction' certificate and it mentions tax code 399P.p

The state pension is taxable but is paid gross, hence the reason for the 399P tax code. They give your Dad his personal allowance and deduct the amount for his state pension.

However on £95.88 per month and a tax code of 399P he wouldn't be paying tax as he can earn £333.25 each month before he is due to pay tax.

Are you sure he is paying tax?

As to the tax return, I would suggest your Dad ( with your help if necessary) phones HMRC to see why or if it's still necessary.

mania112

Because you pay tax on income, not on employment.

Income from a pension is taxed in the same way as income from a job.

Your fathers tax allowance is £10,500 and will be £10,660 when he turns 75.

Sun Life are paying £1,150.56 with a tax code which allows £3,990 tax free - so there should be not tax paid on that.

Similarly if Sun Life and State Pension are they only income he receives he falls within the allowances.

THAT BEING SAID - I don't know why he needs to complete a self-assessment - it should all be done for him. Best to contact the tax man.

http://search2.hmrc.gov.uk/kb5/hmrc/contactus/view.page?record=hpkspulskxM

wwp8

Thank you for your reply,

He has no other income or any savings, I have just found an annual statement and I may be wrong, as it mentions deductions at 0.

So looks like he is not paying tax, as for the form I will give HMRC a call on Monday.

Thanks again.

jem16

mania112 wrote: »

Your fathers tax allowance is £10,500 and will be £10,660 when he turns 75.

Should already be £10,660 as he is in the tax year when he turns 75. Not that it matters really as he is well below both.

jem16

wwp8 wrote: »

as for the form I will give HMRC a call on Monday.

Thanks again.

Did he complete tax returns when he was working? If so HMRC may just have continued with them even thought there is no reason now.

Ask to be removed from Self Assessment.

wwp8

jem16 wrote: »

Did he complete tax returns when he was working? If so HMRC may just have continued with them even thought there is no reason now.

Ask to be removed from Self Assessment.

Yes he did, so I don't think HMRC knew about the changes.

jem16

wwp8 wrote: »

Yes he did, so I don't think HMRC knew about the changes.

I expect they did as it would be information asked for on the tax return. It's probably more a case of once on you don't get off unless you ask.

HMRC did send a leaflet round with tax returns last year asking you to contact them if you didn't fit with the requirements any longer. Perhaps your Dad missed it?

dtaylor84

jem16 wrote: »

I expect they did as it would be information asked for on the tax return. It's probably more a case of once on you don't get off unless you ask.

Well, that's not entirely true. A year or two ago HMRC sent me a letter informing me they had reviewed my details and decided I no longer needed to complete a self assessment return.

Unfortunately a few weeks later they sent another letter informing me they had reviewed my details and decided I should start completing a self assessment return.

I'm not entirely sure what triggered either of the letters, but it seems they do have a process to remove people from Self Assessment when they think it's no longer required.

jem16

dtaylor84 wrote: »

I'm not entirely sure what triggered either of the letters, but it seems they do have a process to remove people from Self Assessment when they think it's no longer required.

Perhaps they do but it's not very vigorously followed. I was asked to complete a tax return 10 years ago after the death of my husband. My affairs are pretty straight forward and could be handled by a simple tax code change but HMRC have never suggested I should come off SA. To be honest I'm quite happy with that as I know my tax is in order ech year and it takes a very short time to complete.