State Pension entitlement versus actual payments for tax

Horki

I’d be glad of some help to understand State Pension payments - the significance of ‘entitlement’ compared to actual payments to my bank account in a tax year; and which amount should be included in a tax return.  I have read the notes at HMRC which say I am taxed on the entitled amount rather than, in my case a lower, actual amount paid to me.

molerat

Your pension is due on a certain day each week but is usually paid 4 weekly in arrears.  Your taxable pension is the weekly amount times the number of those days in the year.  Your personal tax account shows how much that is.

Horki

Thank you molerat.  So do I have to accept being taxed on money that I have never received?

molerat

You will receive it but maybe not in the relevant tax year.

QrizB

Horki said:

So do I have to accept being taxed on money that I have never received?

I'm going to go with "yes, you do" unless you're going to give us more specific information on what money it is that you have never received.

By way of comparison, a landlord pays tax on the rent due, not on the rent received. A business pays tax on the amount invoiced, not on the amount paid.

Horki

molerat said:

You will receive it but maybe not in the relevant tax year.

Never realised that; thank you.  Is there a way to check each year that the notified entitlement has been paid and is that a good idea?

etienneg

Horki said:

Thank you molerat.  So do I have to accept being taxed on money that I have never received?

It's only a difference of exactly when you receive the money. Overall you pay tax on exactly the right amount of money. So, for example, if your entitlement is £8,000 this tax year, you will pay tax on £8,000. However, you may not receive a small amount of this until soon after 5th April 2022. So if you regard paying the tax on that small amount this year when you don't receive it until next year, then yes, you have to accept that. But you won't pay tax next year on that small amount, even though it will be received in the next tax year. It's not worth worrying about.

Horki

QrizB said:

Horki said:

So do I have to accept being taxed on money that I have never received?

I'm going to go with "yes, you do" unless you're going to give us more specific information on what money it is that you have never received.

Happy to provide more detail and glad of your help. I added up the monthly amount paid into my bank account in a single tax year; it is over £600 less than that notified by The Pension Service and quoted also by HMRC for the same tax year. I am concerned that I have misunderstood something or miscalculated. 

zagfles

Horki said:

QrizB said:

Horki said:

So do I have to accept being taxed on money that I have never received?

I'm going to go with "yes, you do" unless you're going to give us more specific information on what money it is that you have never received.

Happy to provide more detail and glad of your help. I added up the monthly amount paid into my bank account in a single tax year; it is over £600 less than that notified by The Pension Service and quoted also by HMRC for the same tax year. I am concerned that I have misunderstood something or miscalculated. 

Monthly?? You haven't made the mistake of thinking the state pension is paid monthly and only added 12 amounts have you? The state pension is not paid monthly - it's paid 4 weekly so you get 13 or 14 payments each year.

Dazed_and_C0nfused

Horki said:

QrizB said:

Horki said:

So do I have to accept being taxed on money that I have never received?

I'm going to go with "yes, you do" unless you're going to give us more specific information on what money it is that you have never received.

Happy to provide more detail and glad of your help. I added up the monthly amount paid into my bank account in a single tax year; it is over £600 less than that notified by The Pension Service and quoted also by HMRC for the same tax year. I am concerned that I have misunderstood something or miscalculated. 

State Pension isn't paid monthly, it's 4 weekly.

molerat

Horki said:

Happy to provide more detail and glad of your help. I added up the monthly amount paid into my bank account in a single tax year; it is over £600 less than that notified by The Pension Service and quoted also by HMRC for the same tax year. I am concerned that I have misunderstood something or miscalculated. 

Seems a large difference there.  This tax year 52 x my weekly amount is £8989.24. HMRC tax me on £8985 and I will receive £8972.28 in my bank. On the plus side in the 29-30 tax year I will receive 14 x 4 weekly payments but only be taxed on around 13 of them