Will all pensioners have to file a tax return!

Dazed_and_C0nfused

eastcorkram said:

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.....

D0 (and CD0) means 40% would be deducted.

SD0 means 21% would be deducted.

You would never have two K codes.  HMRC will notify each pension payer/employer of the code for their income.

Eldi_Dos

GunJack said:

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

Not really, quite straightforward your pension administrators will deal with it, you just need to enjoy the fruits of your labour.

GunJack

Eldi_Dos said:

GunJack said:

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

Not really, quite straightforward your pension administrators will deal with it, you just need to enjoy the fruits of your labour.

one of those administrators is MyCSP, so not so straightforward!! 

molerat

GunJack said:

Eldi_Dos said:

GunJack said:

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

Not really, quite straightforward your pension administrators will deal with it, you just need to enjoy the fruits of your labour.

one of those administrators is MyCSP, so not so straightforward!! 

My CSP will simply do as they are told by HMRC as they do for everyone else

GunJack

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.

 I won't need D0 for anything once I finished work, the only time I'll be in 40% bracket is between 60 and finishing work altogether which should only be 2 years max.  The only time all 4 pensions will be in payment will be when taking any residual DC for extras... it should work out:-

1. salary + PCSPS (40% tax bracket on probably all of PCSPS)
2. PCSPS + DC (Personal Allowance and 20%)
3. PCSPS + DB2 + smaller DC (PA and 20%)
4. PCSPS + DB2 + SP, with any residual DC used for nice extras (any residual PA on PCSPS, BR on all rest)

As it stands at current rates, total SP and DBs comes to around £32k pa, so even with full CPI on PCSPS, CPI+1% max 6% on DB2 and SP triple lock I shouldn't hit 40% bracket once past SPA unless inflation stays high and PAs don't increase in line forever

badmemory

If state pension goes over personal allowance then as Marcon says HMRC now do simple assessment.  They are notified by the DWP of how much that SP is.  They send the letter including the calculation usually by end July.  That gives someone the best part of 6 months to save the amount of tax,  At the very worst you have 3 months to pay.  All you need to do (apart from paying) is check that all their figures are correct.  The year that may well be the hardest is the first year of taking any pensions.

FatFred66

I think if I was PM or Chancellor of Exchequer I'd struggle to justify charging Income Tax on the standard State Pension. The implication would be that State pension is too high or that tax allowance is too low.

It's like a mission to alienate every member of the electorate with an above-40%-of-average IQ.

NannaH

I’d like to see the Personal allowance at £15k, with the ability to pool it with your spouse when retired or with a SAHP , as there is often a large discrepancy in couples,  the marriage allowance simply isn’t enough :£ 5000 would be much better. 

MattMattMattUK

From an economic and international perspective the UK personal allowance is already far too large, in a few European countries it tops out at around €8,000, in most it is a few thousand Euros, in some it is zero, ours is far too large. The most sensible solution would be to combine Income Tax and National Insurance, streamlining the system, then cap the personal allowance permanently, never allowing it to rise, whilst it should be cut or abolished that would be a step too far in the childish political climate, so capping it and allowing inflation to erode it is the best option. 

For married couples I would give them the option to jointly file for income tax, again pretty much every other major international and European country allows that, and it makes sense when benefits are handed out on a per household basis.

Finally the triple lock needs to go, it should be fixed as a percentage of average earnings, remove the inflation and 2.5% minimum rise elements. 

Eldi_Dos

@MattMattMattUK
How does that sit with your stance to support multi million pound bonuses to CEO of energy company while customer complaints were soaring and many people worried about rising fuel costs.