State Pension and Personal Independence Payment

Dazed_and_C0nfused

mcnic110 said:

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. 

The onus would be on the MIL to notify HMRC of a change i.e. the taxable benefit ending.

If that is the issue then she/you can now update HMRC but they will only change things for a maximum of 5 years, the current tax year and the previous 4 (2022-23 back to 2019-20).

mcnic110

I’ll have a look at her PTA in daylight hours. I’ll go back as many years as I can. She had no contact with HMRC, TBH she would struggle to get the batteries in a remote control properly. 

mcnic110

MIL didn't contact HMRC, she can't even change the batteries on a remote control! My wife has set up a PTA for MIL. I will look at that and see if I can identify when they decided PIP was going to be a taxable benefit and any other errors. I think in the past the assumption has been 'Its from the government, so it must be correct'. Wrong!

xylophone

'Its from the government, so it must be correct'. Wrong!

Alas, too right!

german_keeper

I think the easiest way is just to check the tax code on the private widows pension, assuming it is taxable. If she is paying full 20% tax on it (ignoring the paltry £48 tax free allowance in the earlier communication) then HMRC need to take action. If there is a tax code allowing approx £4,054 of tax free allowance on it then the issue is just poor communication or an initial error that has now been fixed.

mcnic110

german_keeper said:

I think the easiest way is just to check the tax code on the private widows pension, assuming it is taxable. If she is paying full 20% tax on it (ignoring the paltry £48 tax free allowance in the earlier communication) then HMRC need to take action. If there is a tax code allowing approx £4,054 of tax free allowance on it then the issue is just poor communication or an initial error that has now been fixed.

Having looked at her tax code notices back to 20/21 they are taking her PIP as being a taxable income. On every form it states “Less other benefits (state benefit)”.  She has no other benefits other than PIP and her state pension.
The latest notice 23/24:
Personal Allowance. £12570
Total                          £12570
Less State Pension.  £10581
Less Other Benefits (state pension) £4476
Her private pension is approx £3500 so not even close to her PIP of £4476
The only remedy is to call HMRC. And whilst 0300 numbers are inclusive in my call plan I do have to pay a per minute access charge. I wont be stopping with EE when my contract is up in 3 months. But that’s another story. And of course to make a personal visit to a tax office one has to call to make an appointment…….

Dazed_and_C0nfused

mcnic110 said:

german_keeper said:

I think the easiest way is just to check the tax code on the private widows pension, assuming it is taxable. If she is paying full 20% tax on it (ignoring the paltry £48 tax free allowance in the earlier communication) then HMRC need to take action. If there is a tax code allowing approx £4,054 of tax free allowance on it then the issue is just poor communication or an initial error that has now been fixed.

Having looked at her tax code notices back to 20/21 they are taking her PIP as being a taxable income. On every form it states “Less other benefits (state benefit)”.  She has no other benefits other than PIP and her state pension.
The latest notice 23/24:
Personal Allowance. £12570
Total                          £12570
Less State Pension.  £10581
Less Other Benefits (state pension) £4476
Her private pension is approx £3500 so not even close to her PIP of £4476
The only remedy is to call HMRC. And whilst 0300 numbers are inclusive in my call plan I do have to pay a per minute access charge. I wont be stopping with EE when my contract is up in 3 months. But that’s another story. And of course to make a personal visit to a tax office one has to call to make an appointment…….

It really isn't anything to do with PIP and mentioning that is only likely to cause further confusion.

It is almost certainly Carers Allowance.  Which she did receive and from everything you've posted seems likely that, for understandable reasons, she hasn't advised HMRC that that this (taxable) benefit has ended.

Once notified HMRC will be able recalculate her tax liability for 2019-20 onwards and issue an updated tax code for the current tax year.  

If she had overpaid tax in the previous 4 years HMRC will issue her with a refund and the new tax code will be used by her private pension payer (they will automatically recalculate the tax for the current tax year in the process).

She did get carers allowance until 2017

NB.  There are no longer any tax offices where she can visit

mcnic110

My bad, she has never been in receipt of carers allowance, I was misinformed by SWMBO. It was paid to my late FIL and ceased at the point that his death was registered. Apparently it happens automatically when the death is registered. However, I will be asking what state benefit HMRC think is being paid. Stranger things have been known to happen!

xylophone

It is almost certainly Carers Allowance.

Does not appear to tally with figures here

https://www.gov.uk/government/publications/benefit-and-pension-rates-2023-to-2024/benefit-and-pension-rates-2023-to-2024

Does not appear to tally with PIP either.

she has never been in receipt of carers allowance, I was misinformed by SWMBO. It was paid to my late FIL 

For whom was he caring? You said that your MIL didn't start to receive PIP until 2018 and he died in 2017.

https://www.gov.uk/carers-allowance

You may be eligible for Carer’s Allowance if you, the person you care for and the type of care you provide meets certain criteria.

The person you care for

The person you care for must already get one of these benefits:

• Personal Independence Payment - daily living component
• Disability Living Allowance - the middle or highest care rate
• Attendance Allowance
• Constant Attendance Allowance at or above the normal maximum rate with an Industrial Injuries Disablement Benefit
• Constant Attendance Allowance at the basic (full day) rate with a War Disablement Pension
• Armed Forces Independence Payment
• Child Disability Payment - the middle or highest care rate
• Adult Disability Payment - daily living component at the standard or enhanced rate

Was he in receipt of some other benefit?

OP - did your MIL reach SPA in the new system (on or after 5/4/16) while your FIL reached it in the old (on or earlier than 5/4/16)?

Now see

https://researchbriefings.files.parliament.uk/documents/CBP-7631/CBP-7631.pdf

• Where the contributor reached SPA or died in the old system and the dependant reached SPA in the nSP. The basic principle is that the dependant is entitled to an inherited amount equivalent to what they would have been entitled to had the old system had continued. 

Was your FIL entitled to a high Additional State Pension? SERPS/S2P/GRAD?

If so, is it possible that £4476 is ASP inherited from her late husband?

See p12 onwards  here https://assets.publishing.service.gov.uk/media/5a758e27e5274a6faebebd94/derived-inherited-entitlement.pdf

Do you have sight of your MIL's SP increase letter which she would have received in around March this year?

Is she actually receiving SP of £10,581 plus  £4476 per annum?

That is to say  weekly NSP of £203.48 NSP in her own right plus inherited ASP of £86.07 a week?

eastcorkram

It even states on the notice of coding that the £4476 is state pension. So presumably inherited.