Will all pensioners have to file a tax return!

Albermarle

Check if you need to send a Self Assessment tax return - GOV.UK (www.gov.uk)

dealyboy

I suspect this will hit me in the next couple of years as I have full new SP plus extra SP (having deferred).

At the moment my SIPP provider has a tax code representing the balance of my personal allowance after SP deducted.

My presumption is that SP will continue to be paid without tax deducted and my SIPP provider will hold a 'basic rate' type of tax code, so deducting income tax on a whole drawdown. I will receive a PA302 at the end of the tax year demanding tax is paid by 31 Jan as per a tax return.

Thank you @Dazed_and_C0nfused and @Marcon as ever.

Qyburn

The issue if the SP becomes taxable isn't the hassle of doing a tax return vs the simplicity of the "simple assessment". It's the fact that people on low incomes are going to be hit with a lump sum tax demand in arrears. For many that's going to be unexpected, and I expect some of them won't have spare cash to settle it. It's a very different thing to tax being deducted as the SP is paid.

Nebulous2

Qyburn said:

The issue if the SP becomes taxable isn't the hassle of doing a tax return vs the simplicity of the "simple assessment". It's the fact that people on low incomes are going to be hit with a lump sum tax demand in arrears. For many that's going to be unexpected, and I expect some of them won't have spare cash to settle it. It's a very different thing to tax being deducted as the SP is paid.

That could well become a massive problem.

I was working with people who had mental health problems, chaotic lifestyles, and were often living on benefits, in the later stages of the poll tax.

Everyone had to pay a percentage of the poll tax ( 15 or 25% minimum?) and helping people who didn't know where their next meal was coming from, to budget for that, was a challenge. 

Nominally it was to be paid from benefits, but many of them landed in arrears. 

The state paying money as benefits, and then expecting some of it back, is to be avoided if possible. 

GunJack

I've been wondering about this for a while now, and it's not just concerning SP. I'll still be working when my PCSPS becomes payable at 60, which will, if salary alone doesn't beforehand, take me into 40% bracket. Simple enough if salary (post sal-sac) makes 40% on it's own, but if not it may well need a tax return when I've never had to go anywhere near them before.

Will be even more complex by SP age, what with SP, 2x DB pensions and possibly some residue left in a DC!! 

dealyboy

@GunJack said:

I've been wondering about this for a while now, and it's not just concerning SP. I'll still be working when my PCSPS becomes payable at 60, which will, if salary alone doesn't beforehand, take me into 40% bracket. Simple enough if salary (post sal-sac) makes 40% on it's own, but if not it may well need a tax return when I've never had to go anywhere near them before.

Will be even more complex by SP age, what with SP, 2x DB pensions and possibly some residue left in a DC!! 

... yes, just when people want life to become simpler.

Mothman

Due to deferment my OH's state pension currently exceeds her personal allowance. No tax return is required she just receives a Simple Assesment each year around July time showing the tax due for the previous tax year, which she pays on receipt by debit card.

Dazed_and_C0nfused

GunJack said:

I've been wondering about this for a while now, and it's not just concerning SP. I'll still be working when my PCSPS becomes payable at 60, which will, if salary alone doesn't beforehand, take me into 40% bracket. Simple enough if salary (post sal-sac) makes 40% on it's own, but if not it may well need a tax return when I've never had to go anywhere near them before.

Will be even more complex by SP age, what with SP, 2x DB pensions and possibly some residue left in a DC!! 

You'll have tax codes for each source of PAYE income.

Might start as 1257L (PCSPS) and D0 for the two other pensions.

Once State Pension starts it could be more like 197L and D0.

If you aren't higher rate on the PCSPS source then it gets more complicated and you might have an adjustment to that code so it's less then 1257L, BR at the other DB pension and D0 at the DC one.

Unless you hit some other criteria for Self Assessment, for example HICBC, then a tax return shouldn't be needed.

Silvertabby

GunJack said:

I've been wondering about this for a while now, and it's not just concerning SP. I'll still be working when my PCSPS becomes payable at 60, which will, if salary alone doesn't beforehand, take me into 40% bracket. Simple enough if salary (post sal-sac) makes 40% on it's own, but if not it may well need a tax return when I've never had to go anywhere near them before.

Will be even more complex by SP age, what with SP, 2x DB pensions and possibly some residue left in a DC!! 

Can't help with the DC bit, but I have 2 X DBs and my State pension.  My little LGPS pension tax code is BR, and my RAF pension tax code is 200.  Nice and easy! 

eastcorkram

Dazed_and_C0nfused said:

GunJack said:

I've been wondering about this for a while now, and it's not just concerning SP. I'll still be working when my PCSPS becomes payable at 60, which will, if salary alone doesn't beforehand, take me into 40% bracket. Simple enough if salary (post sal-sac) makes 40% on it's own, but if not it may well need a tax return when I've never had to go anywhere near them before.

Will be even more complex by SP age, what with SP, 2x DB pensions and possibly some residue left in a DC!! 

You'll have tax codes for each source of PAYE income.

Might start as 1257L (PCSPS) and D0 for the two other pensions.

Once State Pension starts it could be more like 197L and D0.

If you aren't higher rate on the PCSPS source then it gets more complicated and you might have an adjustment to that code so it's less then 1257L, BR at the other DB pension and D0 at the DC one.

Unless you hit some other criteria for Self Assessment, for example HICBC, then a tax return shouldn't be needed.

What does DO mean in these examples please? 

I should have two state pensions from different countries, neither taxed at source. So presume they issue a code of , let's say K500 for other income. If that code gets sent to the people paying my DB scheme. Is there then a different code, that gets used for money from a DC scheme? Or do they use the K500 code?  I currently have two SIPPS with different providers. Then there's also possible employment income too.....