Income Tax bands frozen till April 2028 view?

Qyburn

It would seem fundamentally wrong if people on solely the New State Pension which is supposed to be pretty much the minimum, are going to be hit with a lump sum tax demand of possibly several hundred pounds. And what about those on lower SP, receiving Pension Credit, how will that be taxed?

For the lowest paid I think it would really only be fair for tax to be deducted as they go.

Silvertabby

Dazed_and_C0nfused said:

NedS said:

Qyburn said:

From discussions with a colleague a couple of years ago there was no mechanism in place to tax the State Pension. If that's still the case then no matter how easy this Simple Assessment is, it still would mean thst those in receipt of SP only are going to be asked to pay back some of what they've received (and possibly spent).

In my opinion once it looks like tax will be due on the SP it needs to be collected as it's paid.

Isn't it possible for some pre-2016 pensioners to already have old SP entitlements above £12570/year? If so, how do those pensioners with no other taxable income get taxed?

Yes, it's possible to have £15k+.

Some may complete a Self Assessment return but there shouldn't be any need for that nowadays as HMRC can issue a Simple Assessment.

This is legally enforceable so HMRC can pursue any tax that doesn't get paid and the taxpayer has the right of appeal if they believe the calculation is wrong.

The tax should normally be paid by 31 January after the end of the tax year but this deadline is extended if there is a delay by HMRC in issuing the Simple Assessment.

A neighbour is on well over £20K, due to high SERPS/SP2 and 5 years deferral.  I won't repeat what he says when other (old)  pensioners say everyone should have been put onto the nSP rate in April 2016.

Silvertabby

Qyburn said:

It would seem fundamentally wrong if people on solely the New State Pension which is supposed to be pretty much the minimum, are going to be hit with a lump sum tax demand of possibly several hundred pounds. And what about those on lower SP, receiving Pension Credit, how will that be taxed?

For the lowest paid I think it would really only be fair for tax to be deducted as they go.

Those on lower SP plus PC usually receive an amount just under the full nSP.

I still think that if it's clear that the nSP will exceed the personal allowance (plenty of notice from mid October to April) then the personal allowance will be tweeked to cover it.

Applying a tax code to State pension payments would involve a HUGE update to the DWP computer systems, and we all know how successful that has been in the past!  And requiring all pensioners to submit a tax return, even a simple assessment, would result in newspaper headlines of "Granny can't afford food or heating after tax demand".

Really so much simpler - and almost certainly cheaper - to keep the personal allowance over the nSP.

Beddie

Tax free allowances should rise with inflation, perhaps with a cap so unusual years do not cause too much of a jump. 

They do that for benefits, pensions etc. so why not help the workers a bit too?

Dazed_and_C0nfused

And requiring all pensioners to submit a tax return, even a simple assessment

You don't submit a Simple Assessment, it's something HMRC issue using the data they hold.

Silvertabby

Dazed_and_C0nfused said:

And requiring all pensioners to submit a tax return, even a simple assessment

You don't submit a Simple Assessment, it's something HMRC issue using the data they hold.

But wouldn't that still result in a bill for the total tax due?

Dazed_and_C0nfused

Silvertabby said:

Dazed_and_C0nfused said:

And requiring all pensioners to submit a tax return, even a simple assessment

You don't submit a Simple Assessment, it's something HMRC issue using the data they hold.

But wouldn't that still result in a bill for the total tax due?

Yes but no form filling, they would just need to pay the tax due (assuming the calculation was correct 😀).

Silvertabby

Dazed_and_C0nfused said:

Silvertabby said:

Dazed_and_C0nfused said:

And requiring all pensioners to submit a tax return, even a simple assessment

You don't submit a Simple Assessment, it's something HMRC issue using the data they hold.

But wouldn't that still result in a bill for the total tax due?

Yes but no form filling, they would just need to pay the tax due (assuming the calculation was correct 😀).

Cue newspaper picture of sad faced granny showing her unlit gas fire, empty fridge, and tax demand.  

geordiejon

yes but still people on here saying we should reduce personal allowance by ten grand making pensioners pay 2 grand more tax.
i'm all right jack merchants.

Silvertabby

geordiejon said:

yes but still people on here saying we should reduce personal allowance by ten grand making pensioners pay 2 grand more tax.
i'm all right jack merchants.

No-one on here has called for the personal allowance to be reduced!