State pension and tax.

anotherquestion

Hi folks,

At the moment I am on ESA and also receive an occupational pension from a local authority, any Tax is taken from the occupational pension.

However I am due to get the full State pension this year, ESA will stop of course, just wondering will the Tax still be deducted from the occupational pension or will it come out of the State pension., which will be the greater amount each month?

Many thanks.

JGB1955

It will come out of the occupational pension.

Dazed_and_C0nfused

Tax is never deducted from normal State Pension payments.

If possible any tax due will be deducted from your local authority pension.

If you have a small local authority pension and large State Pension it's sometimes necessary for you to make an additional payment direct to HMRC.

That usually only happens if the tax due is more than 50% of your local authority pension.

calcotti

Just to add, in case it’s not clear from what has already been said, you should expect to see more tax being taken from the occupational pension so the amount you receive will be less (on the assumption that your State Pension is likely to exceed any taxable ESA you have been receiving.

anotherquestion

Many Thanks all for replies As I will start to get state pension in December, I also wonder whether I will have to tell the relevant department as regards ESA that I am of state pension age, and also inform HMRC that I have started to get the pension?

I usually get a tax code for the next tax year around this time, but I take it that won't take into consideration the part year state pension that I am about to receive.

Dazed_and_C0nfused

You shouldn't need to tell HMRC as DWP notify them.

You may get a tax code which looks wrong but will be updated once HMRC have your State Pension details from DWP.

molerat

There should be no need to inform HMRC of receiving the state pension as DWP will do it ........ but there have been cases recently where there has been a break down in the system and that has not happened ...... and your tax code will be changed once that information has been passed.  HMRC will not know of the pension until it has come into payment - you may defer it - so your forthcoming 2023-24 code will not take it into account.

calcotti

You shouldn’t need to tell ESA either - but keep an eye on your bank account and if you do get a payment after pension age ring them.