self assessment state pension statement

unholyangel

mksysb said:

sheramber said:

mksysb said:

mybestattempt said:

mksysb said:

sheramber said:

mksysb said:

Assuming you are paid monthly, just take one of the monthly payments during the year and multiply by 13.

That doesn't take into account that the April payment may include  a change of rate part way through the payment period.

Tax is charged on what you are due to receive, not what actually receive.

Do you have an authoritative source to back this up?

 

These extracts from the HMRC guidance may help you understand:


https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75700


https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

I understand perfectly well, and I believe this trumps yours.

https://www.gov.uk/tax-on-pension/how-your-tax-is-paid

"After your first year of getting the State Pension, you’ll pay tax based on 52 weeks of payments each year."

This is exactly what is happening in my case.

Yes but it does not say the 52 payments will all be the same amount

e.g. My payment for April 24 was £36 less than the May payment as the pension increase only applied to two weeks  of April. 

13 x April payment would be wrong for my annual amount

13 X May  would be wrong for my annual amount. 

Let me try and explain it again, as you clearly aren't getting it.  The tax on state pensions is based on the accrual basis.  This means it is based on what you are entitled to get in the tax year, not your actual payments.  Obviously if your pension changes, the payments in April will be different.  With the accrual basis you take what your weekly pension is, as advised by the DWP at the beginning of the new tax year and multiply it by 52. That is the amount you will be taxed on.  

I was just trying to put it in layman's terms for the OP when he asked how much pension he should put in his SA, when I suggested that if he was paid monthly as opposed to weekly he should multiply the sum he received by 13.  I didn't realise that that would upset some people, as I should have said 28 day payment, but that was implied as I said to multiply by 13, and not 12.  Obviously, you would not multiply the edge cases by 13, but just the normal  amount received throughout the year.  How you could misinterpret what the HMRC guide said I have no idea.  They seemed to have explained it simply as possible.

Strangely though one of the HMRC documents says:-

"Pensioners are often content to pay Income Tax on the amount received in a year, as in most years the amounts accruing and received are similar. However, it is possible in certain circumstances for the amounts to be different. If a taxpayer requests the statutory basis this should be accepted."

So it seems if you want to do it your way, just tell the HMRC people and they will accept it.

I would recommend you don't take excerpts out of context because it will cause you to get the wrong answer, as you have done here.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

Flugelhorn

ajfhpuzzled9999 said:

Can it really be true that the millions of pensioners who complete a yearly self assessment have no way to fill in the State Benefit Received box without calling a number and waiting up to 28 working days for a BR735? Adding up payments into the bank account gives the wrong number, and HMRC then write to tell you you messed up your return! This is madness!

How many pensioners do self assessment?

Dazed_and_C0nfused

Flugelhorn said:

ajfhpuzzled9999 said:

Can it really be true that the millions of pensioners who complete a yearly self assessment have no way to fill in the State Benefit Received box without calling a number and waiting up to 28 working days for a BR735? Adding up payments into the bank account gives the wrong number, and HMRC then write to tell you you messed up your return! This is madness!

How many pensioners do self assessment?

Seventeen last year.




















That is a guess though.

Nomunnofun1

unholyangel said:

Is this argument still going on? 

The SA100 guidance notes for the 2023-2024 year, made available by HMRC to help you complete your tax return, give instructions of:

Box 8 State Pension

Use the letter ‘About the general increase in benefits’ that the Pension Service sent you to find your weekly State Pension amount.

Add up the amount you were entitled to receive from 6 April 2023 to 5 April 2024 and put the total in box 8. For tax purposes, the correct amount is always the figure of weekly entitlement not the number of payments you received, so this will be the first week at the old weekly pension rate, plus 51 weeks at the new weekly pension rate.

In a nutshell - the important phrase being:

’always the figure of weekly entitlement’

sheramber

mksysb said:

sheramber said:

mksysb said:

mybestattempt said:

mksysb said:

sheramber said:

mksysb said:

Assuming you are paid monthly, just take one of the monthly payments during the year and multiply by 13.

That doesn't take into account that the April payment may include  a change of rate part way through the payment period.

Tax is charged on what you are due to receive, not what actually receive.

Do you have an authoritative source to back this up?

 

These extracts from the HMRC guidance may help you understand:


https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75700


https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

I understand perfectly well, and I believe this trumps yours.

https://www.gov.uk/tax-on-pension/how-your-tax-is-paid

"After your first year of getting the State Pension, you’ll pay tax based on 52 weeks of payments each year."

This is exactly what is happening in my case.

Yes but it does not say the 52 payments will all be the same amount

e.g. My payment for April 24 was £36 less than the May payment as the pension increase only applied to two weeks  of April. 

13 x April payment would be wrong for my annual amount

13 X May  would be wrong for my annual amount. 

Let me try and explain it again, as you clearly aren't getting it.  The tax on state pensions is based on the accrual basis.  This means it is based on what you are entitled to get in the tax year, not your actual payments.  Obviously if your pension changes, the payments in April will be different.  With the accrual basis you take what your weekly pension is, as advised by the DWP at the beginning of the new tax year and multiply it by 52. That is the amount you will be taxed on.  

I was just trying to put it in layman's terms for the OP when he asked how much pension he should put in his SA, when I suggested that if he was paid monthly as opposed to weekly he should multiply the sum he received by 13.  I didn't realise that that would upset some people, as I should have said 28 day payment, but that was implied as I said to multiply by 13, and not 12.  Obviously, you would not multiply the edge cases by 13, but just the normal  amount received throughout the year.  How you could misinterpret what the HMRC guide said I have no idea.  They seemed to have explained it simply as possible.

Strangely though one of the HMRC documents says:-

"Pensioners are often content to pay Income Tax on the amount received in a year, as in most years the amounts accruing and received are similar. However, it is possible in certain circumstances for the amounts to be different. If a taxpayer requests the statutory basis this should be accepted."

So it seems if you want to do it your way, just tell the HMRC people and they will accept it.

So, my May pension payment would be what you are saying I should multiply by 13 as that is the amount I will get  for 12 payments from May to March- what you call my normal payment.

 It that is not what my accrual amount is. 

My accrual amount is 1 week at old rate and 51 at new rate.

Why would it be correct  to enter 13 X  my ‘ normal amount received’?

You are the only one who is not getting it.

MetaPhysical

I'd imagine a lot of state pensioners would fill out a tax return???  When I get there, god/providence willing, in ten years my income will consist of FIVE revenue streams:
1. State pension
2. UFPLS payments from my main DC pension
3  Teachers Pension DB
4. Employer DB pension
5. Small DC pension UFPLS

I imagine some people have even more than that. 

I have no wish to consolidate these pensions together for a multitude of reasons.

What HMRC "object" ties all this lot together other than the SA ??

Flugelhorn

MetaPhysical said:

I'd imagine a lot of state pensioners would fill out a tax return???  When I get there, god/providence willing, in ten years my income will consist of FIVE revenue streams:
1. State pension
2. UFPLS payments from my main DC pension
3  Teachers Pension DB
4. Employer DB pension
5. Small DC pension UFPLS

I imagine some people have even more than that. 

I have no wish to consolidate these pensions together for a multitude of reasons.

What HMRC "object" ties all this lot together other than the SA ??

they do it in the same way as anyone who has multiple incomes - they apply the personal allowance to one of the main streams and then hand out codes BR or D0 or whatever to all the others 

MetaPhysical

OK, thanks.  Can you "select" which of the streams gets the PA set against it?

How would they then know about taxed interest if you go over the threshold?

Flugelhorn

MetaPhysical said:

OK, thanks.  Can you "select" which of the streams gets the PA set against it?

How would they then know about taxed interest if you go over the threshold?

 When I had multiple income streams you could decide which got the PA - some people split it across more than one (can't be the state pension) . Doesn't affect the amount of tax you pay though and there is often a bit of "balancing up" that goes on. 
re interest they get told by the banks / building soc etc and either send you a bill or amend the code.

I am a pensioner doing SA, not sure why any longer and I thought they had stopped it but I still get told to do it and pay them ££££ after sending the form in

Sarahspangles

Flugelhorn said:

ajfhpuzzled9999 said:

Can it really be true that the millions of pensioners who complete a yearly self assessment have no way to fill in the State Benefit Received box without calling a number and waiting up to 28 working days for a BR735? Adding up payments into the bank account gives the wrong number, and HMRC then write to tell you you messed up your return! This is madness!

How many pensioners do self assessment?

When HMRC began to roll out Simple Assessment there were 11m people completing tax returns. New pensioners are being moved onto Simple Assessment, 140k are now on this system (25% of the total on Simple Assessment). So if there are still many older pensioners on Self Assessment, or new pensioners with more complex tax affairs, there must be tens, possibly hundreds of thousands still on Self Assessment rather than PAYE.

The good news is that if they complete a digital return, the state pension figure is pre-filled for them.