Tax on State Pension 18 December 2022 at 11:48AM in Cutting tax 17 replies 458 views

RG2015

My state pension is paid every four weeks. Clearly any payment made within four weeks of the 5th/6th April will relate to two tax years.

Am I correct to assume that the tax liability will be determined by the date of the payment?

For example, if my payment date is 6th April 2023 then this payment will be included in tax year 2023/2024?

This, despite the fact that 27 days of this will relate to the previous tax year?

molerat

No.  Tax liability is determined by the date the payment is due not the date it is paid.

purdyoaten2

Nope. Broadly you will pay tax on the amount due to be received in the tax year - calculated by multiplying your weekly rate by 52. There is a view (justifiably) that the first weekly amount due in the tax year relates to a previous tax year but, as I said, broadly!

From the tax return notes:

Add up the amount you were entitled to receive from 6 April 2021 to 5 April 2022 and put the total in box 4.1. 

Dazed_and_C0nfused

For the first year it's simply the number of weeks (I presume rounded down not up) you were entitled to it X the weekly amount.

Then each year after it's 1 week of the previous years rate and 51 of the new year.

RG2015

Many thanks. This is very useful. However there is a slight discrepancy here, probably minimal but a discrepancy nonetheless.

@purdeyoaten2 says weekly rate x 52 although they did caveat their statement.

@Dazed_and_C0nfused says 1 x previous years rate plus 51 x current years rate.

The increase from April 2023 is much larger than usual at 10.1%. For the full new weekly state pension, the increase is £18.70.

Income tax on this will be £3.74. hence the amount due for 2023/2024 will be this amount less than a full year at the new rate.

Unless of course I have got this wrong as well. 

RG2015

@purdeyoaten2 mentions box 4.1 but I am not on SA.

Will HMRC use the correct figures of 1 x old rate plus 51 x new rate for my PAYE calculation?

frugalmacdugal

Hi,

have a read of THIS.

RG2015

frugalmacdugal said:

Hi,

have a read of THIS.

Thanks for this but it is a long read.   My first question has been answered, all I need now is whether is is 52 or 1 plus 51.

Does your link say if HMRC use 52 x weekly amount or 51 x weekly amount plus 1 x previous years weekly amount?



As an addendum, I may have found an answer. I have just seen that the state pension in my PTA online has been increased for this year.

I had reported to HMRC on the phone my annual state pension, based on 1 x  the old rate plus 51 x the new rate. This has been on my PTA online all year.

However, they have recently changed this to 52 x the new rate so a few pounds higher than I had  reported.

I am not overly concerned, but they do appear to be taxing me for more than I will be receiving.

Dazed_and_C0nfused

RG2015 said:

frugalmacdugal said:

Hi,

have a read of THIS.

Thanks for this but it is a long read.   My first question has been answered, all I need now is whether is is 52 or 1 plus 51.

Does your link say if HMRC use 52 x weekly amount or 51 x weekly amount plus 1 x previous years weekly amount?



As an addendum, I may have found an answer. I have just seen that the state pension in my PTA online has been increased for this year.

I had reported to HMRC on the phone my annual state pension, based on 1 x  the old rate plus 51 x the new rate. This has been on my PTA online all year.

However, they have recently changed this to 52 x the new rate so a few pounds higher than I had  reported.

I am not overly concerned, but they do appear to be taxing me for more than I will be receiving.

So you've received a new tax code for 2022:23 showing the deduction HMRC have calculated?

DWP will report 52 weeks of the new rate.

But HMRC's tax code deduction should show the total of 1 x old (2021:22) rate and 51 x new (2022:23) rate.

Not a good sign that this isn't happening!

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76030

NB. Post amended to correct tax years

purdyoaten2

Yes - that was my point and why I stated ‘broadly’ as I foresaw the ensuing discussion. It’s a long time argument. I always used the 51 plus 1 but it seems we are as far away as ever from a definitive instruction. 

RG2015

Dazed_and_C0nfused said:

RG2015 said:

frugalmacdugal said:

Hi,

have a read of THIS.

Thanks for this but it is a long read.   My first question has been answered, all I need now is whether is is 52 or 1 plus 51.

Does your link say if HMRC use 52 x weekly amount or 51 x weekly amount plus 1 x previous years weekly amount?



As an addendum, I may have found an answer. I have just seen that the state pension in my PTA online has been increased for this year.

I had reported to HMRC on the phone my annual state pension, based on 1 x  the old rate plus 51 x the new rate. This has been on my PTA online all year.

However, they have recently changed this to 52 x the new rate so a few pounds higher than I had  reported.

I am not overly concerned, but they do appear to be taxing me for more than I will be receiving.

So you've received your tax code for 2023:24 showing the deduction HMRC have calculated?

They must be working at least a month ahead of the normal timescale as I'm sure tax codes for the new tax year aren't normally calculated until well into January or even February.

DWP will report 52 weeks of the new rate.

But HMRC's tax code deduction should show the total of 1 x old (2022:23) rate and 51 x new (2023:24) rate.

Not a good sign that this isn't happening!

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76030

Sorry, no. Not 2023/2024.

I am talking about 2022/2023 so they are not a month ahead of themselves.

I have just received a tax code amendment for 2022/2023 but this did not mention a change in my SP amount.

The increase in my SP amount is on my PTA online. I don't know when this was changed but am pretty sure it is in the last few days.

It sounds like they have used the DWP 52 week amount for 2022/2023 and hopefully they will adjust this after 2022/2023 has ended.

Edit.

Very useful link. Many thanks!