Who actually pays the tax on state pensions?

UKSBD

Following on from a couple of previous posts asking what my mother will receive after my father recently passed she now has the figures from DWP and she will be receiving £335 a week.

This obviously takes her over her tax allowance, but who actually pays the tax?

Is it automatically deleted from the £335 or will she get a tax bill at the end of the year?

I estimate she will be paying approx £1,000 a year tax.

She also has approx £50,000 in non ISA savings which look likely to earn approx £2,000 I know she has a £1000 allowance but how is the other £1,000 taxed (she doesn't fill in a self assesment)

My rough calculations are she will be paying approx £1,200 a year in tax, which is fine if spread over the year, but could be a shock to her if she just suddenly gets a £1,200 tax bill.

How does she get the tax collection spread over the year, is it just done automatically, or can't this be done?

la531983

https://www.litrg.org.uk/tax-guides/pensioners/how-my-tax-collected

I suggest she keeps aside roughly £23 from each payment, maybe £25 to be on the safe side.

Dazed_and_C0nfused

UKSBD said:

Following on from a couple of previous posts asking what my mother will receive after my father recently passed she now has the figures from DWP and she will be receiving £335 a week.

This obviously takes her over her tax allowance, but who actually pays the tax?

Is it automatically deleted from the £335 or will she get a tax bill at the end of the year?

I estimate she will be paying approx £1,000 a year tax.

She also has approx £50,000 in non ISA savings which look likely to earn approx £2,000 I know she has a £1000 allowance but how is the other £1,000 taxed (she doesn't fill in a self assesment)

My rough calculations are she will be paying approx £1,200 a year in tax, which is fine if spread over the year, but could be a shock to her if she just suddenly gets a £1,200 tax bill.

How does she get the tax collection spread over the year, is it just done automatically, or can't this be done?

If she doesn't have a PAYE pension then she will get an annual bill from HMRC, usually issued in the Summer after the tax year ends with the tax being payable on 31 January after the end of the tax year.

There is no separate allowance for interest but she should be able to benefit from some of the savings starter rate band (0% tax rate) and the full £1,000 savings nil rate band (also 0% tax rate).

She may get most of the savings starter rate in the current tax year and, depending on the triple lock, none from 2024-25 onwards due to the level of her State Pension in a full year.

sammyjammy

If I remember correctly she is inheriting a private pension/work pension as well?  If so the tax will be taken from that income, my understanding on the savings is that if my first point is true they will adjust her tax code for the savings, if she just has the state pension they will contact her.

UKSBD

Thanks, my father did also have a small private pension which was taxed.

Hopefully this is passing to her, but is still going through the process of transferring.

Judging from the info I've read, HMRC work out and tell the pension provider what tax to take of the private pension based on what she also receives in state pension.

I'll tel her to put £30 a week to one side though, and if it turns out she won't have tp pay it will be a nice surprise for her.

UKSBD

sammyjammy said:

If I remember correctly she is inheriting a private pension/work pension as well?  If so the tax will be taken from that income, my understanding on the savings is that if my first point is true they will adjust her tax code for the savings, if she just has the state pension they will contact her.

Yes, I have just read some info about that (we must have posted at about the same time)

She still hasn't heard what she will be receiving from the personal pension provider, but hopefully once that is sorted, we will find out that they are also taking off tax based on her state pension too.