Mums Tax

gt568

Afternoon....


I'm helping sort my mothers finances since Dad died last month and she reckons they both did self assessment returns...I don't yet have a full handle on their finances but she is in her 70s and gets state pension, some of his occ pension, US social security pension and her own occ pension.


As her income alone will be around 27k, why would she need to do a SA? Do occ pensions not get taxed at source?

Dazed_and_confused

Having tax deducted at source is irrelevant as far as the requirement to file a return is concerned.

There could be dozens of reasons why a tax return is required however from what you've posted this is likely to be the reason,

US social security pension

Pennywise

Dazed_and_confused wrote: »

There could be dozens of reasons why a tax return is required however from what you've posted this is likely to be the reason,

US social security pension

Yep, that'll be it. The UK HMRC can't dictate to the US how much tax to deduct and won't know how the pension/tax figures without you telling them. State pension has no tax deducted at source. So, probably pretty much impossible for HMRC to issue PAYE coding notices to the UK occ pensions to get accurate tax deductions.

gt568

I've found some of her occ pension pay slips and she is paying tax at source on those, do I take that into account when doing a SA for her?


And would I be right in thinking if she is paying tax on her occ pension, the only remaining taxable income would be the US SS pension and the UK SP?

uknick

gt568 wrote: »

I've found some of her occ pension pay slips and she is paying tax at source on those, do I take that into account when doing a SA for her?

Yes. When you complete the SA you enter the gross amount of Occ pension paid and then the tax already paid on that.

gt568 wrote: »

And would I be right in thinking if she is paying tax on her occ pension, the only remaining taxable income would be the US SS pension and the UK SP?

It would appear so from what you've said. However, what is the tax status of the US pension? Is it paid tax free by the US authorities? If not, there could be double taxation relief available.

Dazed_and_confused

And would I be right in thinking if she is paying tax on her occ pension, the only remaining taxable income would be the US SS pension and the UK SP?

It would be fairly unusual if she didn't have any taxable interest. Possibly dividends as well.

I think you may be looking at Self Assessment from the wrong perspective. You enter all taxable income on the return, the fact that tax may have been deducted during the year is irrelevant.

Her tax liability will be calculated taking into account all the taxable income you have declared and then any tax paid will be deducted (assuming you include it on the return) leaving the amount she needs to pay or any refund due.

gt568

Dazed_and_confused wrote: »

It would be fairly unusual if she didn't have any taxable interest. Possibly dividends as well.

I think you may be looking at Self Assessment from the wrong perspective. You enter all taxable income on the return, the fact that tax may have been deducted during the year is irrelevant.

Her tax liability will be calculated taking into account all the taxable income you have declared and then any tax paid will be deducted (assuming you include it on the return) leaving the amount she needs to pay or any refund due.

Mate, I am no tax expert, what do you mean by the bolded bit? Do you mean interest on savings?

Dazed_and_confused

Yep (but not ISA's)

jennifernil

It may be that tax on her state pension has been paid via the tax code on her occupational pension, that happens on my husband's pension.

For example, not real figures, if the usual tax code was 1200, indicating tax free allowance of £12000, and her state pension was £6000 annually, then the tax code being used would be 600, indicating she only had £6000 of her tax free amount remaining to set against her occupational pension.

Any other occupational pensions , such as the one she inherited from your dad, would then be taxed at the basic rate with no tax free amount.

That would leave only any tax due on the US pension or savings/investments to sort.

Because not everything is taxed at source, she does need to do Self Assessment.

00ec25

gt568 wrote: »

Mate, I am no tax expert, what do you mean by the bolded bit? Do you mean interest on savings?

the tax return must include declaring all sources of income except those which are explicitly excluded:

you MUST declare the GROSS (ie pre tax deduction) amount of :
- pension such as state and occupational
- interest received on any savings (bank, building society etc)
- dividends from any shares she holds
- US income
- any income she gets from letting a property
- any income she gets from doing cash in hand work
- anything else she gets

you do NOT declare explicitly excluded accounts such as
- interest received on ISA accounts
- interest received on some national savings certificates

gt568

Do I need to declare her attendance allowance?