State Pension Payments and Taxation

RetiredandHappy

I am trying to work out how much State Pension I received during the 2016-17 tax year. I receive additional private pensions so the amount of State Pension I received makes a difference to my tax.

I started receiving State Pension in September and received a small amount to cover the days needed to get me into sync with the official payment schedule. I then received 6 x 4 weekly payments during 2016-7. "Payment" here means money appearing in my bank.

The next payment was received in my bank on 13/4/2017. By my reckoning, that is in the 2017-18 tax year. It certainly would be if it was normal salary.

DWP seem to calculate the total annual payment as 7 of the 4 weekly payments, to have extended the tax year to 14/4/2017 (dates on BR127) and to have ignored the initial small payment.

Is there some cunning way in which they are correct?

molerat

Tax is due on the dates the pension is accrued and not the date it is paid so probably 3 of the 4 weeks of the 13/4/17 payment are from last year.

RetiredandHappy

@molerat
Thank you for answering. Is that fact or opinion?

It does seem to fit what DWP have done but it is the only example I can think of where it is the case. Specifically, salary does not accrue, interest does not accrue, dividends do not accrue.

Are the government really perverse enough to come up with one exception to the general rule?

xylophone

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim76005

RetiredandHappy

Thank you both.

To be clear, the provided link shows that molerat and the DWP are correct, you pay on the basis of weeks of entitlement, not cash received in the year.

It seems perverse to me but hey it all adds variety:(

badmemory

Yes it does seem odd & so different from the norm, but is correct. You will also find another interesting fact, that normally the increase in state pension happens in the second week of the new tax year not the first.