Tax on state pension

calcotti

I thought that for tax purposes HMRC simply calculate the SP figure as 52 x the weekly rate for the year.

littledog70

calcotti said:

I thought that for tax purposes HMRC simply calculate the SP figure as 52 x the weekly rate for the year.

The dwp supply HMRC with the amount of state pension each person gets each year.

badmemory

And we all carefully ignore the 53 week years.

RG2015

My annual tax free amount is currently £13,830.

When DWP report my state pension to HMRC, will this be reduced by my annual state pension? (51 x new weekly rate plus 1 x old weekly rate)

Dazed_and_C0nfused

RG2015 said:

My annual tax free amount is currently £13,830.

When DWP report my state pension to HMRC, will this be reduced by my annual state pension? (51 x new weekly rate plus 1 x old weekly rate)

It won't be, that will be your tax code allowances.

Marriage Allowance doesn't allow the recipient any additional allowances but to avoid disadvantaging people HMRC allow it as an allowance for tax code purposes.

Its actually a fixed tax deduction off your tax liability.

But yes, your tax code should include a single State Pension amount made up of 1 week at last year's rate and 51 of this year's rate.

RG2015

Dazed_and_C0nfused said:

RG2015 said:

My annual tax free amount is currently £13,830.

When DWP report my state pension to HMRC, will this be reduced by my annual state pension? (51 x new weekly rate plus 1 x old weekly rate)

It won't be, that will be your tax code allowances.

Marriage Allowance doesn't allow the recipient any additional allowances but to avoid disadvantaging people HMRC allow it as an allowance for tax code purposes.

Its actually a fixed tax deduction off your tax liability.

But yes, your tax code should include a single State Pension amount made up of 1 week at last year's rate and 51 of this year's rate.

I am just quoting exactly what is reported by HMRC on my personal tax account online.

“Your annual tax free amount is £13,830”

I can only go on what HMRC tell me.

RG2015

I have just received my second state pension payment and it was 1 week at the old rate and 3 weeks at the new rate.

However, there is still no change to my tax code on my personal tax account online.

badmemory

You know the saying "patience is a virtue"?  Well whoever made it up was talking about HMRC.

RG2015

badmemory said:

You know the saying "patience is a virtue"?  Well whoever made it up was talking about HMRC.

Point taken. However, this does raise another question.

My May company pension has been entered on my PTA online, and there is no deduction for income tax on my state pension.

I do not believe this can change, so my June company pension could have a deduction of 3 months of income tax on my SP. Potentially, this could keep increasing every month until the DWP report my SP to HMRC.

If this continues, is there a limit on the amount that can be deducted from my company pension in a single month?

molerat

RG2015 said:

If this continues, is there a limit on the amount that can be deducted from my company pension in a single month?

Yes.  They can only deduct 50% of the payment.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye11050