Pensions, State Pension and tax

gt568

I've been sorting out my late fathers estate which has, amongst other things, necessitated me completing his and my mothers self assessments.

Now I understand that the SP is paid gross, so most pensioners would use up most of their personal allowance with that plus an occupational pension.  So do most pensioners have to do self assessment?  How does it work otherwise?

No specific reason I ask other than sheer curiosity....

Dazed_and_C0nfused

For most people this can be accommodated through a reduced tax code.

For example the tax code may be along the lines of,

Personal Allowance £12,500
Less State Pension £8,000
Tax code allowances £4,500
Tax code = 450L

If it is a very small occupational or private pension and very large State Pension it might be Self Assessment is necessary but that would be relatively rare.  For example

Personal Allowance £12,500
Less State Pension £14,000
Tax code allowances £-1,500
Tax code = K149

If the occupational lor private pension was only say £200 then the employer could only deduct £100 in tax (50% maximum) so the pensioner would still owe £240 not deducted under PAYE.

gt568

So most people have to inform their pension providers of how much SP they have so the code can be worked out?

Dazed_and_C0nfused

No.  DWP notify HMRC, HMRC calculate the tax code and send out two versions.

One to the pensioner with the breakdown on and another to the pension payer just advising them of the code number i.e. 450L.

gt568

How do HMRC know who is paying the individuals pension?

Dazed_and_C0nfused

The pension payer tells them just like an employer would have to

TadleyBaggie

I've got a State Pension, a Final Salary pension and a SIPP Drawdown, I asked to be put on self  assessment (because I didn't trust HMRC to get it right) but they wouldn't allow it.

xylophone

I've got a State Pension, a Final Salary pension and a SIPP Drawdown, I asked to be put on self  assessment (because I didn't trust HMRC to get it right) but they wouldn't allow it.

This doesn't prevent your downloading and submitting a  paper tax return if you are unsure of what you should be paying?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/829400/SA100.pdf

[Deleted User]

TadleyBaggie said:

I've got a State Pension, a Final Salary pension and a SIPP Drawdown, I asked to be put on self  assessment (because I didn't trust HMRC to get it right) but they wouldn't allow it.

Not sure that that makes sense because:

1) you can check your annual calculation when HMRC issue it.

2) if you get it wrong it will be HMRC who will let you know.

badmemory

TadleyBaggie said:

I've got a State Pension, a Final Salary pension and a SIPP Drawdown, I asked to be put on self  assessment (because I didn't trust HMRC to get it right) but they wouldn't allow it.

This is what they do now.  They even told me that if I did submit self assessment again they would ignore it.  I will soon owe them £3k although they insist I owe them nothing, frankly I'm sick of telling them their mistakes.  Told them twice they have this years tax code wrong.  Even next years (only bothered once) will only take a third of what I owe. 

I used to worry about having to file self assessment as I got older but frankly it was a darn sight easier than having to check their usually incorrect figures.  The DWP don't even seem capable of sending the correct state pension figures over to HMRC which definitely does not help!

jimmo

On the other hand, I also have 2 private pensions plus State Pension and am not in SA.

My tax affairs are relatively simple and I have had no problems with HMRC which haven't been sorted out with a single phone call. I am happy.

To the OP: Judging by your other current thread I would guess that your father was in SA because he had foreign income though I have no idea what an IRA is.

 https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return