state pension increase.

johnaka

got a state pension increase like many others but what the government failed to increase is the allowance before tax.
I have two small pensions of which is totally wiped out due to tax and a small mount of the other.
so to top it off I'm no better off with this increase.
has anyone else are in the same position?

Dazed_and_C0nfused

johnaka said:

got a state pension increase like many others but what the government failed to increase is the allowance before tax.
I have two small pensions of which is totally wiped out due to tax and a small mount of the other.
so to top it off I'm no better off with this increase.
has anyone else are in the same position?

Unless you have some very unusual situation I think you've misunderstood.

Most likely situation is you have paid 20% (or 40%) on the extra pension income.  So you still get to keep 80% (or maybe 60%) of it. 

And yes, the Personal Allowance has been frozen for everyone, not just pensioners.

It could be argued you are in a better position than many people as your 10.1% State Pension increase will outstrip many pay rises.

pinnks

I would agree with @Dazed_and_C0nfused. 

Given that you already had the state pension and other sources of income it seems likely that your total income was already near or above the personal allowance.  So, the worst-case scenario is that 20% (or 40% if your total income is above £50,000) of your increase has gone in tax, leaving you with 80% of that increase.  It is impossible to be worse off - tax doesn't work like that.

Aretnap

It is actually possible to have an effective marginal tax rate of over 100%, ie be left worse off by an increase in your income, if you are paying the graduate tax (sorry, I mean repaying a student loan) and claiming child benefit for a large family. But that's unlikely to apply to a pensioner - it only applies to feckless young people who work and bring up children, so nobody really minds.

https://forbesdawson.co.uk/articles/2023/03/13/the-90-rate-of-income-tax-and-how-to-avoid-it/

maman

I know it feels like giving with one hand and taking away with the other but that's just the way it works. While a state pension isn't taxed, it still counts as income. So if your income increases then you pay more tax on the total. In this case, the tax is taken from the occupational pension as although described as small, they must be big enough to go over the personal allowance.

I think people do care @Aretnap. I think it's appalling that the government allow the pay of, for example, teachers and nurses to be constantly eroded but begrudge them a decent pay rise while awarding pensioners 10%+. That's because they expect pensioners to vote for them. How wrong can you be! 🤣

Albermarle

johnaka said:

got a state pension increase like many others but what the government failed to increase is the allowance before tax.
I have two small pensions of which is totally wiped out due to tax and a small mount of the other.
so to top it off I'm no better off with this increase.
has anyone else are in the same position?

As others have said, what you describe seems very unlikely, but it is not unheard of for HMRC to make mistakes. If you post the actual figures, then we can see what might be happening.

molerat

Unlikely it is being "wiped out" as PAYE can only deduct up to 50% of the gross amount.

hyubh

maman said:

I think people do care @Aretnap. I think it's appalling that the government allow the pay of, for example, teachers and nurses to be constantly eroded but begrudge them a decent pay rise while awarding pensioners 10%+. That's because they expect pensioners to vote for them. How wrong can you be! 🤣

Both teachers and nurses benefit from unfunded public sector pensions that increased by more than 10.1% though...? (Active member revaluation in their respective CARE schemes being CPI+1.5%)

maman

hyubh said:

maman said:

I think people do care @Aretnap. I think it's appalling that the government allow the pay of, for example, teachers and nurses to be constantly eroded but begrudge them a decent pay rise while awarding pensioners 10%+. That's because they expect pensioners to vote for them. How wrong can you be! 🤣

Both teachers and nurses benefit from unfunded public sector pensions that increased by more than 10.1% though...? (Active member revaluation in their respective CARE schemes being CPI+1.5%)

I agree the pensions are a good benefit (if people stay that long because of ever worsening working conditions) but 'jam tomorrow' doesn't pay today's bills. 

dealyboy

The general point of course is that the government 'plays' with tax rates, and pension and wage increases, but leaves the personal allowance alone. This is very gradually eroding the relative net income of the low income person compared to the median income basic rate taxpayer.

What is mooted now? ... the Tories to reduce income tax by 2%. The person on £50k gains £750 (1.5%) but a person on £15k gains £50 (0.33%) ... and the state pensioner (me) nothing.

It is cynical not to increase the personal allowance with CPI and it will backfire in a year's time when the working poor and pensioners cast their vote.

Altior

maman said:

hyubh said:

maman said:

I think people do care @Aretnap. I think it's appalling that the government allow the pay of, for example, teachers and nurses to be constantly eroded but begrudge them a decent pay rise while awarding pensioners 10%+. That's because they expect pensioners to vote for them. How wrong can you be! 🤣

Both teachers and nurses benefit from unfunded public sector pensions that increased by more than 10.1% though...? (Active member revaluation in their respective CARE schemes being CPI+1.5%)

I agree the pensions are a good benefit (if people stay that long because of ever worsening working conditions) but 'jam tomorrow' doesn't pay today's bills. 

Fortunately the highly skilled and educated, but overworked and underpaid teachers and nurses can get jam today in the private sector. Unfortunately, they would have to give up the (actually) lucrative conditions that come with working in the public sector, which is why I assume they remain in the public sector.