State Pension - Taxed by the back door

hyubh

flaneurs_lobster said:

FIREDreamer said:

IanBerry said:

I am aged 69 and as such receive a State Pension. I worked full time from 1971 to 2016 and paid contributions as required. From 1973 (when I became 18) to Apr 1995 via my Army pay and May 1995 to 2016 via civilian industry salary. As such I receive a military pension and a former company pension, which when added to my State Pension clearly exceeds the £12570 threshold (plus the transfer of part of my non working wife's allowance). State Pension is considered INCOME for taxation purposes, so my income is based on my State Pension plus Military and Company Pension and hence tax is deducted based on the TOTAL INCOME less the statutory allowance. 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. I have no issue paying my fair share of the tax but I have never been able to get this clear in my head and feel in some way penalised and would welcome some thoughts.

Not sure what the complaint is. 

State pension is taxable like every other pension.

There is a tax free allowance, a 20% band, 40% band and a 45% band.

Total all pensions and divide into the categories, starting from the left.

Please read the whole thread, or at least the first half dozen replies.

Enlighten us... The AFPS is a great DB scheme (fair enough). Every adult citizen has the same personal allowance (fair enough). The state pension is not taxed at source (just how it is).