201/2022 state pension vs Personal Allowances

mrsfletch_2

I got my letter from the DWP today, saying what pension I will get for the coming year. So far since my pension started, it has been under the personal allowance by £100 or so. This year, I am a little bit over. Only the main part of my pension has gone up by inflation = 2.5%, while the extra bits from SERPS have only gone up by 0.50 % - otherwise he'd be grabbing back even more.

This means that at the end of the 2021/2022 tax year I will owe Mr Meany the Chancellor the equivalent of nearly 3 weeks of my pension rise. I won't be rushing to pay it!
 Why do this and involve me with all the hassle of contacting HMRC and submitting a tax return for less than £20. Waste of admin for them and for me. Why not just adjust the pension at source?  What is the view of HMRC if the amount owing is so low?  Surely it isn't worth their while to collect it, check it, send out coding etc,

Looking a bit deeper, I find that Sunak has FROZEN the personal allowance till 2026, so each year from now on, he will be grabbing back a bigger nibble of my meagre income. Ratbag!
Jenny Fletcher

TadleyBaggie

I very much doubt you will be required to submit a tax return.

Dazed_and_C0nfused

mrsfletch_2 said:

I got my letter from the DWP today, saying what pension I will get for the coming year. So far since my pension started, it has been under the personal allowance by £100 or so. This year, I am a little bit over. Only the main part of my pension has gone up by inflation = 2.5%, while the extra bits from SERPS have only gone up by 0.50 % - otherwise he'd be grabbing back even more.

This means that at the end of the 2021/2022 tax year I will owe Mr Meany the Chancellor the equivalent of nearly 3 weeks of my pension rise. I won't be rushing to pay it!
 Why do this and involve me with all the hassle of contacting HMRC and submitting a tax return for less than £20. Waste of admin for them and for me. Why not just adjust the pension at source?  What is the view of HMRC if the amount owing is so low?  Surely it isn't worth their while to collect it, check it, send out coding etc,

Looking a bit deeper, I find that Sunak has FROZEN the personal allowance till 2026, so each year from now on, he will be grabbing back a bigger nibble of my meagre income. Ratbag!
Jenny Fletcher

Your post doesn't make sense.

If you are expecting a new tax code then you are unlikely to owe tax by the year end, unless the PAYE source (another pension?) is very small and impacted by the 50% tax deduction limit.

Even if you do owe some tax on the State Pension you wouldn't normally be expected to complete a tax return just for that reason, HMRC would send you a calculation showing the tax due and ask you to pay it by 31 January 2023.

If it is very small you may not have to pay it back.

I think it would need new legislation for DWP to be able to deduct tax from the State Pension and given the (very gradual) move to everyone getting a State Pension which will be less than the Personal Allowance I doubt there would be much appetite from the Treasury to spend money on such a change.

mrsfletch_2

It may not immediately make sense to YOU, but it does make sense. 
Maybe you aren't old enough to remember SERPS and how it came about,. There was a time when you could either opt IN to paying more NI which meant you got an additional state pension or you opted OUT and put that money into a private/company pension scheme.  I opted IN to begin with as my career was changing and I didn';t want to commit to anything at that point.
So my Pension Statement now shows my regular State Pension at the old rate - plus 3 other items 
Pre 97 Additional State Pension 
Post 97 Additional State Pension
Graduated Retirement Benefit   
Together those all contribute to a weekly pension which, taken annually, exceeds my Personal Allowance by a small amount. I did a very quick calc,. today and the tax liability is just over £11!  So really not worth ANYONE worrying about.  
You MAY have answered the question, by saying HMRC will contact me, but is that saying that the DWP are telling them what my pension is? I'm not sure that they are!  
But, at what point would HMRC - assuming anyone told them, including me - start wanting me to complete a tax return.  It seems a colossal waste of time, but if I need to do it in 2023 and thereafter, I suppose I will have to. I don't want to get caught further down the line and have a tax bill to pay that I can't afford. There is nowhere on the HMRC site in the section on state pensions that tells you what to do, what the limits are or anything else.

Dazed_and_C0nfused

The bit that doesn't make sense is that on the one hand you say you expect to owe tax at the end of the year and then refer to HMRC "sending out coding". 

The purpose of tax codes is to try and prevent tax being owed at the end of the year so if you got a new (and correct) tax code why would you owe tax?

Maybe you are confusing "coding" with something else?

Anyhow, there is genuinely no reason, based on what you have posted, to think you would need to complete a tax return.  DWP supply HMRC with State Pension details and HMRC can just send you a calculation showing the tax that is due and, assuming you agree with the calculation, you just pay it by 31 January 2023.

It's possible you might come under this relatively new system,
https://www.gov.uk/government/publications/issue-briefing-simple-assessment-ending-the-tax-return/simple-assessment-ending-the-tax-return

[Deleted User]

Jenny Fletcher, I don't think it is appropriate for you to post a personal attack, name calling etc, particularly regarding a subject that you appear to misunderstand. This is a different environment  post covid for  all of us, and taxes paid are for the benefit of the whole nation. Regards

Robert_McGeddon

thetimewill said:

Jenny Fletcher, I don't think it is appropriate for you to post a personal attack, name calling etc, particularly regarding a subject that you appear to misunderstand. This is a different environment  post covid for  all of us, and taxes paid are for the benefit of the whole nation. Regards

Each to their own. I read Jenny Fletcher's posts with interest and enjoyed them - they gave me some food for thought. I wholeheartrdly support non-PC views and the right to free speach.

LHW99

You could always put the amount over personal allowance into a SIPP and get the tax paid back into it by HMRC if you are under 75.

zagfles

Inflation isn't 2.5%, it's 0.5%. The reason your main pension has gone up 2.5% is the "triple lock" which guarantees a min 2.5% on the basic state pension. So you've had a rise of 5 times the inflation rate on your main pension.

As a result, you'll be better off in real terms, even after paying a small amount of tax. Compared to millions who've had their pay frozen, or lost their jobs, or even their lives, as a result of the pandemic.

So I wouldn't feel too sorry for yourself.

xylophone

You are female and reached State Pension Age pre 6/4/2016?

Were you ever contracted out?

Is a COD shown on your Statement of Increase in Benefit 2021/22?

If so,  are you in receipt of a pension related to a contracted out pension scheme?

Dazed_and_C0nfused

LHW99 said:

You could always put the amount over personal allowance into a SIPP and get the tax paid back into it by HMRC if you are under 75.

Just to ensure the op doesn't misunderstand, contributing to a SIPP will not make any difference whatsoever to the amount of income tax payable on her pension income.

But she could get a free £720 tax relief added to a personal pension fund by contributing £2,880 into a SIPP.  This would be far more than the tax it seems she will have to pay but she could have been doing that whilst not paying any tax in the first place.