HMRC and state pension

etienneg

I know that (for tax calculations) HMRC look at the amount of state pension accrued (rather than paid) in a tax year, but how exactly is that calculated in the first year you start to receive state pension? Is it number of whole weeks (i.e. rounded down), or number of weeks and days?

For example, let's say someone was due £150pw payable from 05/07/2017. How much would HMRC consider as income for 2017-2018? 05/07/2017 to 05/04/2018 is 39 weeks and 1 day, unless both dates are included in which case it's 39 weeks and 2 days. So would it be £5,850.00 or £5871.43 or £5892.86?

Thereafter, when you are receiving state pension for a complete tax year, do they just say 52 weeks, or what?

GibbsRule_No3.

I'm interested in this as well, since I get one week on March 12 and then the four weeks on April 9, so to me 4 days are in next years tax bracket. I think my tax is going to be a mess for at least three years until things settle down, especially when I take my Stakeholder pension.  It took two years to settle down after I started taking my other pensions and continued to work.

molerat

DWP pass the data to HMRC, which was accurate for weeks and  days for the part year, and then  HMRC make a complete balls of figuring out how to get the right tax.. For whole years again DWP give them the data which is whole weeks, either 52 or 53 depending on the year.

xylophone

https://www.litrg.org.uk/tax-guides/pensioners/tax-code-problems-retirement

drumtochty

In the first year where most people do not start getting a pension from the first pay week in April.

In my case, my state pension is paid two days before the good lady as we are both in receipt of the state pension as the pay date is based on your NI number.

HMRC look at when the payment started until the last pay day usually in March. That is what you actually get paid. They then add on a number of whole weeks from the last pay date to as near as they can get to the 5th of April.

If we look at the original poster question in the first year that the pension is paid. HMRC would calculate the figure on the actual amount paid plus the whole number of weeks after that to get as near as possible to the 5th of April. That value would then be automatically populated in to the persons tax return against state pension in the annual tax return if they have to do one in retirement.

In the following years, it would be 52 weeks and 0 days. That changes of course in the year the person dies.

In some cases there are mistakes but in the few tax returns I have helped my retired friends with, the figure populated in the tax return for state pension has always followed that logic.

GibbsRule_No3.

So the fact that I am so near to the end of this Tax year when I get my SP March 6 does that make it easier?  When deciding to stop working, probably next year, should I aim for end of March to make it easier as well?  Unless they make me redundant in the current Tax year, I can choose when to retire, so I’d like to make it easy on the workings of the Tax system.

drumtochty

Gibbs Rule get on with youre life and retire when you want to.

HMRC will populate youre tax return if you need to do a tax return with the value of your state pension for you.

You have nothing to do appart from pay your tax, stop getting your knickers in a twist over nothing.

On the other hand why do you not just go outside and worry about when your roof will start leaking, not that it will but at least you can worry about that rather than the total non event of the effect of the date of retiring on your income tax.

molerat

HMRC will screw it up whatever you do so no point stressing

GibbsRule_No3.

Didn’t realise I was stressing? More curious, sorry I upset you so much.😱🤔

Dazed_and_C0nfused

To be fair you did imply that you were going to let tax admin determine when you might retire!

badmemory

HMRC populate your self assessment with what DWP tell them.  They both seem to be excellent at messing it up.  NORMALLY (I stress this because every few years it is not true) the first week of each tax year is paid at the old state pension rate with the remaining 51 or 52 weeks paid at the new.  So that could save a couple of pounds.  Make sure they get any savings interest right - they haven't got mine right yet so you need to keep proper records.  Unfortunately retiring does not make life simpler, actually it seems to have made mine more (financially) complicated.