HMRC sending out assessment tax forms to pensioners.

Teahfc

HMRC will send Simple Assessment tax statements to pensioners in the next few weeks.

The combination of frozen tax thresholds and a substantial increase to the state pension has led to many more pensioners being dragged into paying income tax for the first time.

The last government froze the personal allowance at £12,570 until 2028.

The full new state pension saw a 10% increase in April 2023 to over £10,600 annually, followed by another 8.5% rise in April 2024, taking it to more than £11,500 per year.

HMRC says that pensioners will receive a Simple Assessment where there is an underpayment of income tax for a tax year that cannot be collected automatically via PAYE and they are not subject to income tax self assessment.

An underpayment of income tax can result from:

• pensioners who receive income from the State Pension, occupational pensions, employment pensions, and most taxable state benefits
• pensioners with up to £10,000 of untaxed income (for example, from savings or investments).

HMRC will use the information it already holds and information supplied from banks and building societies about people's income and tax situation.

The tax authority will calculate any tax owed or refund due and the Simple Assessment tax statement will show the calculation.

HMRC says taxpayers will need to check that their Simple Assessment statements are correct before paying any tax due.

Internet links: GOV.UK

jim8888

In theory, a lot of us knew that we'd be paying tax on our pensions when we took them. In practice though, it's painful to see that tax being taken, and I bet there are quite a few on these boards that are flirting with a 40% tax bill on some of their pension income. 

Flugelhorn

jim8888 said:

In theory, a lot of us knew that we'd be paying tax on our pensions when we took them. In practice though, it's painful to see that tax being taken, and I bet there are quite a few on these boards that are flirting with a 40% tax bill on some of their pension income. 

they will already be paying tax +++ on the pension if they are near the 40% threshold. 

flaneurs_lobster

Subtle difference, HMRC are sending out STATEMENTS not FORMS. 

And anyone who has tax due that cannot be collected by PAYE may get a statement, not just pensioners.

Exodi

Teahfc said:

The full new state pension saw a 10% increase in April 2023 to over £10,600 annually, followed by another 8.5% rise in April 2024, taking it to more than £11,500 per year.

I know the typical response to pensioners paying tax is one of absolute disgust and horror at even the mere idea, but I have to say as an employee it is hard to sympathise that the big bonanza increases they enjoyed over the last few years (where they double dipped inflation and then subsequent earnings in response to inflation) that it has effectively pushed them into a new tax bracket.

I certainly don't think many workers enjoyed a cumulative ~19.5% increase to their pay over the past 2 years, and it's not far off the pay offer for junior doctors which I have seen pensioners knocking (which is kind of ironic given that they require their services the most).

SouthCoastBoy

If you are lucky enough to live to SPA even the currently employed will receive the benefit of the recent state pension. I never understand why people are upset when the state pension increases, as it is for eveyones benefit, even those currently working.

Silvertabby

SouthCoastBoy said:

If you are lucky enough to live to SPA even the currently employed will receive the benefit of the recent state pension. I never understand why people are upset when the state pension increases, as it is for eveyones benefit, even those currently working.

Exactly, a lot of people don't seem to realise that it's not only the pensions actually in payment that receive the increases.

pinnks

Silvertabby said:

SouthCoastBoy said:

If you are lucky enough to live to SPA even the currently employed will receive the benefit of the recent state pension. I never understand why people are upset when the state pension increases, as it is for eveyones benefit, even those currently working.

Exactly, a lot of people don't seem to realise that it's not only the pensions actually in payment that receive the increases.

I agree - it is locked in for everyone.

And as for pensioners and tax, as an "economically inactive" person myself, I have zero sympathy with the nonsense arguments that pensioners should not pay tax.  If you receive income above the personal allowance, you pay tax.  Get over it.

Dazed_and_C0nfused

pinnks said:

Silvertabby said:

SouthCoastBoy said:

If you are lucky enough to live to SPA even the currently employed will receive the benefit of the recent state pension. I never understand why people are upset when the state pension increases, as it is for eveyones benefit, even those currently working.

Exactly, a lot of people don't seem to realise that it's not only the pensions actually in payment that receive the increases.

I agree - it is locked in for everyone.

And as for pensioners and tax, as an "economically inactive" person myself, I have zero sympathy with the nonsense arguments that pensioners should not pay tax.  If you receive income above the personal allowance, you pay tax.  Get over it.

Unless it's the type of income that gets taxed at one of the 0% rates 😉

pinnks

Yeah, OK, but you get the principle

MeteredOut

pinnks said:

Silvertabby said:

SouthCoastBoy said:

If you are lucky enough to live to SPA even the currently employed will receive the benefit of the recent state pension. I never understand why people are upset when the state pension increases, as it is for eveyones benefit, even those currently working.

Exactly, a lot of people don't seem to realise that it's not only the pensions actually in payment that receive the increases.

I agree - it is locked in for everyone.

Whole swathes of younger generations have convinced each other via social media other than the state pension will either be gone, or means-tested to anyone without a private pension, by the time they reach that state pension age (which will apparently be 80 by then).

It's pervasive click-bait with only a small percentage seemingly wanting to spend time to actually look at the detail. Many are also believe that Starmer has committed to removing the 25% tax free withdrawal from private pensions.

Some are adamant they'll stop paying their NI contributions into THEIR pot when (not if) this gets announced either on October 30th or within the next couple of years.