Military widow’s pension CPI increase?

pinnks

I see, then it cannot be possible to receive less income after tax.

Let's say that your taxable income last year was exactly £12,570, meaning no tax payable.  If that increased to £13,000 because of an apportioned 6.7% CPI increase, then £430 would be taxed at 20% resulting in annual tax of £86, leaving you £344 better off.

xylophone

This is puzzling - what was your tax code in 23/4?

And in 24/5?

I've had another thought.

Are you receiving substantial interest on savings?

molerat

As OP had no other income in 23-24 then a monthly pension paid from November, as indicated by the 2.78% increase, could have been up to £2500 and not incurred any tax.  This tax year anything in excess of £1048 will be taxed so it is quite possible to be receiving less monthly this year than last.  In this scenario even £1200 last year would only net £1196 this year after the increase.

pjs493

pinnks said:

I see, then it cannot be possible to receive less income after tax.

Let's say that your taxable income last year was exactly £12,570, meaning no tax payable.  If that increased to £13,000 because of an apportioned 6.7% CPI increase, then £430 would be taxed at 20% resulting in annual tax of £86, leaving you £344 better off.

I’ve compared my bank statements and payments from each month. This month I’ve received less than months in the previous tax year. The only difference is tax is now being deducted from my pension because of the increase which is turn has resulted in me getting less paid into my bank account. 

I didn’t receive the 6.7% CPI increase. I only received 2.7% for reasons unknown. I’ll call the pension company on Tuesday to see if they’re able to give me an answer or explanation. 

molerat

I only received 2.7% for reasons unknown.

As explained in my other posts 2.78% is the increase for pensions commencing payment from Oct-Nov last year.  Is that the correct payment commencement date ?

Your "Advice of payment" should show you the April payment amount - which is always lower than the rest of the year - and the ongoing payment amount including the tax to be deducted.

pjs493

xylophone said:

This is puzzling - what was your tax code in 23/4?

And in 24/5?

I've had another thought.

Are you receiving substantial interest on savings?

My tax code for both years is 1257L. I had a different tax code in 2022-23 because my husband benefited from the married tax allowance due to me having a lower income than usual that year due to unpaid maternity leave. 

I did receive interest on savings, but because this was less than £5000 I didn’t have to pay any tax on it. (For those earning up to £12570 they can earn an additional £5000 in savings interest before being taxed on it). I did complete a self assessment due to my savings interest, but this hasn’t impacted my tax code. 

Other income comes from untaxed sources such as Child Benefit and obviously, due to the age of my children, I receive their pensions too which go towards things I need for them with any left over going into their ISAs. 

With my husband gone, our outgoings are really quite low. I own a fairly new car outright, only really travel locally except to visit family occasionally (holidays no longer feel doable with two little ones on my own). So I don’t spend much on fuel, food and utilities are my biggest monthly expense. It’s not a huge issue, it’s just that I’d budgeted for the CPI increase so it was a shock to find that in reality I’m getting less than I did last tax year. 

sheramber

You have not confirmed the date you started receiving the pension.

If it was part way through 23/24 you would have unsued perosnal allowances available for the months from6 April to the  month the pension started.

That could account for the fact that you did not pay tax last year but are now liable to pay it.

pjs493

sheramber said:

You have not confirmed the date you started receiving the pension.

If it was part way through 23/24 you would have unsued perosnal allowances available for the months from6 April to the  month the pension started.

That could account for the fact that you did not pay tax last year but are now liable to pay it.

I mentioned above that I stopped receiving a salary from my job in December 2022 and have been on unpaid compassionate leave since then. I also pointed out that my tax code changed during the 22-23 tax year because until his death my husband had the married tax allowance. Last tax year and this tax year I’ve had the same 1257L tax code. Sorry, I thought that answered the question. 

As mentioned right at the beginning, the remittance I received gave the annual figure from the last tax year and the new annual figure for this tax year. It stated that the increase was 2.7%. 

sheramber

22/23 doesnlt effect  you tax.

It is 23/24 that needs looking at.

When  you sttrted to receive the pension. is rlelvant because you get the personal allowance of £12570 for the whole year.

You get 1/12 of that allowance for each month. - £1048.

Any months you do not use that allowance , the amount is carried forward until yo.

 can use it.

So if you received the oension for the whole period April 23 to April 24 then your tax free amount would be 1/12 of the personal allowance. each month.

If you had no income until you received the pension later in the year you would have  unused tax free allowances  to carrry forward. This would mean you might not pay tax  in 23/24.

e.g

if your pension was £2000 a month and you only received it from October you would receive £12,000 from October to   5 April. 
You would have  personal allowances of £12570 to cover that , so no tax would be deducted.


For 24/25, from 6 April 24 to 5 April  25 you would receive 12x £2000 = £24,000. 

But you only have £12570 of  personal allowances for the year  so tax would be due on the balance.. 

Each month you would receive £1048 tax free and pay tax on the balance,

So would get less in your hand


That would explain why no tax wqs deducted in 23/24 but is deducted now.


As has been explained, if you only  started receiveing the pension during 23/34 then you only get a proportion of the 6.7%.
You would get 6.7% if you had received the ppension for the whole year from  6 April 23 to  5 April 24.


If you want your actual figures checked then tell us how much was your total income  for 23/24 and how much  have you received  for6 April 24.