Income tax and pensioners

Dazed_and_C0nfused

dog_nanny said:

I've just realised that the combination of freezing the personal tax allowance and increasing state pension has put my Mother's income about £200 above the personal allowance.

Is it her (i.e. my) responsibility to point this out to HMRC? Or will they spot it themselves? Or will they not bother to chase a 90 year-old pensioner for £40 of tax?

She has no other income so is not on PAYE. As far as I know she has had no contact with HMRC since retiring 30 years ago.

She doesn't need to do anything.

The first time she is likely to hear anything is in the Summer of 2026 when HMRC will send her a Simple Assessment calculation (a PA302 letter) for the 2025-26 tax year.

The tax due will then need to be paid by 31 January 2027.

And the same cycle is likely to then be repeated each year.

The above assumes your post was referring to her current (2024-25) State Pension award.  If you were referring to the 2023-24 rate then you can bring everything forward 12 months.

badmemory

I am expecting a lot more posts like this as the newspapers seem to be enjoying themselves trying to panic people about having to pay this tax such as warning about late payment fines.  It is getting quite silly & way over the top.

Dazed_and_C0nfused

badmemory said:

I am expecting a lot more posts like this as the newspapers seem to be enjoying themselves trying to panic people about having to pay this tax such as warning about late payment fines.  It is getting quite silly & way over the top.

They never let the truth get in the way of an over dramatic headline!

badmemory

Dazed_and_C0nfused said:

badmemory said:

I am expecting a lot more posts like this as the newspapers seem to be enjoying themselves trying to panic people about having to pay this tax such as warning about late payment fines.  It is getting quite silly & way over the top.

They never let the truth get in the way of an over dramatic headline!

So true.  It is really annoying as they seem to imply that someone is suddenly going to have to pay a couple of thousand in tax tomorrow, when in reality unless there has been a serious change in circumstances we are talking maximum £200 in what would currently be over 6 months & no fines.

[Deleted User]

Dazed_and_C0nfused said:

[Deleted User] said:

The underpayment tolerance was £50 last time I remember although I had heard it had increased - can’t remember what to and, therefore, I may have dreamt it. 

https://www.rossmartin.co.uk/sme-tax-news/636-paye-tolerances

Someone recently posted about a small overpayment and following a conversation with HMRC says they were told £50 is still the figure (for tax owed to HMRC).

But whether that is true I don't know.  About 10-12 years it was well publicised as £300 but that can only have been temporary.

I remember the thread - couldn’t find it!

MynameisMichaelCane

Reading this thread has made me realise that my mother may well be in the same boat. I will check it for her but there must be lots of pensioners in their 90s, who are not internet savvy, who have no clue that they are supposed to be paying tax. Many old people are on their own and don't have family who can help them with financial matters.  I can't imagine that the understaffed HMRC are going to be chasing up all these small amounts. 

Dazed_and_C0nfused

MynameisMichaelCane said:

Reading this thread has made me realise that my mother may well be in the same boat. I will check it for her but there must be lots of pensioners in their 90s, who are not internet savvy, who have no clue that they are supposed to be paying tax. Many old people are on their own and don't have family who can help them with financial matters.  I can't imagine that the understaffed HMRC are going to be chasing up all these small amounts. 

If she hasn't asked for online/digital correspondence she would be sent a calculation through the post (if one was needed).

And, if need be, can pay by cheque.

Albermarle

badmemory said:

I am expecting a lot more posts like this as the newspapers seem to be enjoying themselves trying to panic people about having to pay this tax such as warning about late payment fines.  It is getting quite silly & way over the top.

Plus they always use over emotive language, like 'tax trap' or 'tax raid' .

dog_nanny

Thanks for all the replies. I'll just wait and see what happens later next year. Mum's not hard up but she'll probably be very annoyed if she does get a tax bill, no matter how small!

Albermarle

dog_nanny said:

Thanks for all the replies. I'll just wait and see what happens later next year. Mum's not hard up but she'll probably be very annoyed if she does get a tax bill, no matter how small!

Many people are over sensitive about tax, and we see posters making poor financial decisions just to avoid small amounts of tax .
Maybe tell your Mum she is only having to pay a bit in tax, because her pension has gone up so much in the last couple of years. It is not strictly true as the freezing of personal allowances has played its part as well, but perhaps do not remind her of that and she may be less annoyed !