State Pension - Taxed by the back door

Sarahspangles

GibbsRule_No3. said:

Curious, if people do only have the State Pension to live on but can get Pension Credit, could that Pension Credit take them above the £12570 but they still would not pay any tax, or could you not get PC?  Lucky enough not likely to be in a position to apply for any benefits due to Private Pensions and even when I do finally stop working two days a week, those PPs will mean I’ll still be paying tax until I die.

Being in receipt of PC entitles people to various small top-ups and add-ons that effectively leave them better off than someone who just misses out on pension credit. It’s the untaxed extra benefits that the non-PC pensioners miss out on.

kimwp

GibbsRule_No3. said:

Marcon said:

IanBerry said:

My issue therefore is that persons whose only income is the State Pension under the £12570 allowance are not taxed on their State Pension, however those who have other pension incomes are. 

Rather than feeling hard done by because you are paying tax on your state pension, would it make you feel any better to reverse your thinking and see it as paying tax on your military and company pensions? If not, then possibly consider that anyone who doesn't pay tax on their state pension is on such a low income they are going to be having a very rough time financially, whereas you will be more comfortable because you have additional income. 

Curious, if people do only have the State Pension to live on but can get Pension Credit, could that Pension Credit take them above the £12570 but they still would not pay any tax, or could you not get PC?  Lucky enough not likely to be in a position to apply for any benefits due to Private Pensions and even when I do finally stop working two days a week, those PPs will mean I’ll still be paying tax until I die.

From a quick look at gov.uk, pension credit tops up the income to a lower amount than a full state pension. Any additions are for high housing costs or if you are caring for someone.

GibbsRule_No3.

kimwp said:

From a quick look at gov.uk, pension credit tops up the income to a lower amount than a full state pension. Any additions are for high housing costs or if you are caring for someone.

Interesting, one of the reasons I am staying at work is due to the cost of my housing rent, I never earned enough to buy a property or own a car but have always been in employment that had a pension. When I do give up work, they will consider that due to those pensions that I have enough to live on, as I no doubt will, it just won’t be a very comfortable retirement in a few years, when my savings have dwindled away.

LinLui

I am in the very fortunate position of soon being able to claim both the state pension and very generous occupational pension. I do not for one minute have any complaint to make about paying tax on my income. The only thing I am having trouble getting my head around is why you think that income shouldn't be taxed - wherever it comes from. Why would you like to tax POOR PEOPLE so that you will feel better about your tax bill?

Stubod

...."taxed by the back door!???

....I have difficulty understanding peoples logic as to why they think the SP should be "tax free"..???

2childmum2

I wonder whether the op thinks that once your income tips over your personal allowance then you are taxed at 20%  on all your income, rather than just the amount over your personal allowance? I say this because they have said they lose 20% of their state pension
I could be wrong but I've come across a number of people who think this.

Dazed_and_C0nfused

2childmum2 said:

I wonder whether the op thinks that once your income tips over your personal allowance then you are taxed at 20%  on all your income, rather than just the amount over your personal allowance? I say this because they have said they lose 20% of their state pension
I could be wrong but I've come across a number of people who think this.

Bizarre considering they will receive their State Pension in full direct into their bank account each week/fortnight/4 weeks!!

Silvertabby

2childmum2 said:

I wonder whether the op thinks that once your income tips over your personal allowance then you are taxed at 20%  on all your income, rather than just the amount over your personal allowance? I say this because they have said they lose 20% of their state pension
I could be wrong but I've come across a number of people who think this.

I suspect OP is like me - our Armed Forces and other pensions are over the £12,570 personal tax allowance, so the tax due from our State pensions is 20% of the full amount.  But 80% of something is still better than 100% of nothing!

Hoenir

Social media must be the greatest cause of unproductive time ever created............

kimwp

Silvertabby said:

2childmum2 said:

I wonder whether the op thinks that once your income tips over your personal allowance then you are taxed at 20%  on all your income, rather than just the amount over your personal allowance? I say this because they have said they lose 20% of their state pension
I could be wrong but I've come across a number of people who think this.

I suspect OP is like me - our Armed Forces and other pensions are over the £12,570 personal tax allowance, so the tax due from our State pensions is 20% of the full amount.  But 80% of something is still better than 100% of nothing!

Ah! @Silvertabby did you get paid the other pensions before you started getting state pension? So then when you started getting the state pension, your income went up by 80% of the state pension?