Friend not paying income tax in retirement

garybarlowsbeard

As far as I know a friend has not paid any income tax on his pension. He has a state and private pension that he tells me is worth more than £10k but he hasn't paid any tax for about 20 years!

This is slightly worrying, although I don't know exact figures or details. I suppose the first step would be to get the exact figures but assuming what I've said is correct what would be the best advice (as getting the exact info from him could be tricky)?

I assume the fact the private pension is through the fire brigade doesn't make it any way exempt (not even sure if that classes as a private pension?). As far as I know there wouldn't be exemptions for him, he's just a normal person, living alone for 8 years, married before that.

Cheers!

kidmugsy

How odd. All my pensions (apart from the state one) have been taxed at source.

Your_Hero

Tax is collected at source from his private pension. His state pension is not taxed but his tax code is adjusted to reflect this (i.e. lower personal allowance), so his private pension will be taxed. Not sure why you are worried?

jem16

garybarlowsbeard wrote: »

As far as I know a friend has not paid any income tax on his pension. He has a state and private pension that he tells me is worth more than £10k but he hasn't paid any tax for about 20 years!

Then either he doesn't know what he's talking about or he's pulling your leg.

I assume the fact the private pension is through the fire brigade doesn't make it any way exempt (not even sure if that classes as a private pension?).

No it's not exempt from tax. Like all public sector pensions it's paid from the pension provider with tax already deducted and there's no way around that. His tax code will also include a deduction for the state pension so unless he has managed to slip under the radar (which is very unlikely as DWP do report to HMRC), he will be paying tax if his total income is above the personal allowance.

xylophone

It would be surprising if your friend's pension were not taxed at source, taking account of his state pension.

The value of the state pension is deducted from the Personal Allowance so that his tax code might only be say 500L rather than 1000L. http://www.hmrc.gov.uk/pensioners/pension-statepension.htm

Thus the tax he owes on all his pension income is collected from his Fire Service pension before he receives it.

However, if a mistake has occurred and your friend is not paying all the tax he should, now that Real Time Information is in place, he might soon be receiving a demand from HMRC......:eek:

Why are your friend's tax affairs of such concern to you?

hyubh

garybarlowsbeard wrote: »

As far as I know a friend has not paid any income tax on his pension. He has a state and private pension that he tells me is worth more than £10k but he hasn't paid any tax for about 20 years!

I realise Mr Barlow is famed for his tax avoidance, but I think that would be a step too far even for him.

I assume the fact the private pension is through the fire brigade

No no no - your master was a fan of relighting fires, not putting them out!

JezR

A main category of people who have to do self assessment in retirement are those with significant additional state pensions and little or no private pension. These are people that through their working life are most likely to have never seen a tax form.

patanne

That would be me and believe me HMRC have not missed me, in the same way it is highly unlikely that they have missed your friend. After all a fire brigade pension is not something which is going to go under the radar is it? He just hasn't realised that they are taking all the tax from his fire brigade pension.

RichandJ

Possible retained firefighter injury pension. They, as with certain police injury pensions, are exempt from income tax. See

http://www.hmrc.gov.uk/manuals/eimanual/EIM74012.htm

garybarlowsbeard

Thanks. I'll get him to double check.

Moley50

You will probably find that if your "Friend" was injured on duty and had to finish work as a result he/she would then be in receipt of an ordinary pension and possibly an injury pension the injury pension will be none taxable the ordinary pension is taxable. If your "Friend" was young in service his/her ordinary pension would probably not exceed their personal tax threshold i.e less than 10 grand. It is possible hypothetically that they COULD receive over 30 grand tax free depending on the severity of their injury but I guess you perhaps do not want to hear that.