State Pension and Personal Independence Payment

mcnic110

My apologies if this isn't the correct forum, it's my first post. My M-I-L is in receipt of her state pension as well as PIP. She is also in receipt of a small private widows pension. Whilst I know she has to pay income tax on anything above her personnel tax allowance of £12570 it would appear that HMRC are calculating PIP as being a factor in the tax free allowance. I thought this was a tax free benefit, or so it said on the .gov website. State pension and PIP combined takes her over the allowance threshold. Surely if PIP is tax free then it shouldn't be part of the equation? Her combined state and private pension take her over the allowance threshold, so she would only pay PAYE on anything over the allowance. Which I get. It's the fact that HMRC are saying that the amount over the allowance is greater as they are factoring in the PIP payment as well as the pensions. 
I'd ring HMRC but last time I did that the call cost £25!
Any advice appreciated. 

molerat

Are you sure they are deducting the PIP from her tax allowance as often these things are mentioned but not actually used in the calculations.

What is the breakdown of her tax allowance ?

Do you / she have access to her on line tax account ?

mcnic110

this is from December 22 PAYE tax code notice:
Personal Allowance.   £12570
Flat Rate Job Expenses £60. (HMRC have been advised to cancel this allowance)
Less state Pension £8516
Less Other  Benefits (PIP) £4066
Total tax free amount £48


I think we are going to go to our local CAB with all the paperwork that we have to seen if they can make some sense of it all.

molerat

Looks pretty clear cut what is happening, nothing really to make sense of.  Contacting HMRC is the only way to sort this.  Do you know someone who has inclusive minutes on their phone you could borrow ?  Phoning as soon as they open is usually the best time to get through.  The other option is writing.  Or contacting your MP.

mcnic110

Thank you, that’s what I thought. Got inclusive minutes on my mobile so we’ll try that way. 

xylophone

https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

PIP is not a taxable benefit.

Was she in receipt of the private pension in  the tax year 22/23?

mcnic110

she was yes, but that was listed as a taxable income because there was nothing left in her tax free allowance as a result of HMRC including PIP as a taxable benefit as I highlighted above. 

Dazed_and_C0nfused

mcnic110 said:

this is from December 22 PAYE tax code notice:
Personal Allowance.   £12570
Flat Rate Job Expenses £60. (HMRC have been advised to cancel this allowance)
Less state Pension £8516
Less Other  Benefits (PIP) £4066
Total tax free amount £48


I think we are going to go to our local CAB with all the paperwork that we have to seen if they can make some sense of it all.

DWP wouldn't notify HMRC of PIP as it's of no interest to HMRC.

So the £4,066 is either something else, possibly a taxable benefit like Carers Allowance (which may no longer be being received) or your MIL had probably mentioned PIP to HMRC and either confused them by mentioning a non taxable benefit or got a trainee!

xylophone

It is an odd mistake for HMRC to make.

Is the figure for PIP correct?

https://www.gov.uk/government/publications/benefit-and-pension-rates-2022-to-2023/proposed-benefit-and-pension-rates-2022-to-2023

mcnic110

She did get carers allowance until 2017 when my FIL died. She was in receipt of PIP from early 2018. There hasn’t been an issue until 20/21. Good point about a possible trainee error as well. I’m going to approach taxvol.org obo my MIL. This needs sorted out and I want as much ammunition as possible before we go to HMRC. 

xylophone

Did anything change in 2021/22?  Did your MIL have cause to communicate with HMRC during that period?

Has your MIL set up a Personal Tax Account?

https://www.gov.uk/personal-tax-account

Does the amount stated to be other benefits bear any resemblance to what she receives as a private pension?