Income tax on state pension before received at tax year crossover

Suffolk_lass

My birthday is March 18th. I reached state pension age on that date, this year. My first state pension payment was on 8th April 2024, ie in the following tax year, 2024-5. I have just received a P800 saying I owe additional tax in 2023-4 tax year for this pension I did not get paid in that tax year.

Is that right? All the literature I can find says pensions are taxable in the year received, not accrued. State pension is payable in arrears.

Dazed_and_C0nfused

Yes, you should be taxed on a couple of weeks for 2023-24 as you are liable on the State Pension you are entitled to, when it was paid isn't relevant.

Does your current tax code for 2024-25 just have 52 weeks worth in it?

https://library.croneri.co.uk/cch_uk/btr/1030-050

Suffolk_lass

Dazed_and_C0nfused said:

Yes, you should be taxed on a couple of weeks for 2023-24 as you are liable on the State Pension you are entitled to, when it was paid isn't relevant.

Does your current tax code for 2024-25 just have 52 weeks worth in it?

https://library.croneri.co.uk/cch_uk/btr/1030-050

Thank you @Dazed_and_C0nfused - The link you include is an advice site for tax and accounting professionals (I had already checked out several advice sites.

I personally like to see the legislation. The advice site references the  "Income Tax (Earnings and Pension) Act 2003. Social security pensions, as defined in s. 577 are taxed under Pt. 9, Ch. 5". The relevant clause in the legislation as I read it is [my bold]:

Chapter 3 United Kingdom pensions: general rules

569 United Kingdom pensions

(1)This section applies to any pension paid by or on behalf of a person who is in the United Kingdom. (that is me)

(2)But this section does not apply to a pension if any provision of Chapters 5 to 14 of this Part applies to it.

(3)For pensions paid by or on behalf of a person who is outside the United Kingdom, see Chapter 4 of this Part.

570“Pension”: interpretation

In this Chapter “pension” includes a pension which is paid voluntarily or is capable of being discontinued.

571Taxable pension income

If section 569 applies, the taxable pension income for a tax year is the full amount of the pension accruing in that year irrespective of when any amount is actually paid.

572Person liable for tax

If section 569 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.

The relevant legislation link is here

I have posted this additional detail in case it is of use to others reaching state pension age towards the end of the tax year. 

Bookworm105

Suffolk_lass said:

Is that right? All the literature I can find says pensions are taxable in the year received, not accrued. 

not quite
the notes for the tax return tell you what to do 
it is your annual entitlement, not what you physically received

unholyangel

Suffolk_lass said:

Dazed_and_C0nfused said:

Yes, you should be taxed on a couple of weeks for 2023-24 as you are liable on the State Pension you are entitled to, when it was paid isn't relevant.

Does your current tax code for 2024-25 just have 52 weeks worth in it?

https://library.croneri.co.uk/cch_uk/btr/1030-050

Thank you @Dazed_and_C0nfused - The link you include is an advice site for tax and accounting professionals (I had already checked out several advice sites.

I personally like to see the legislation. The advice site references the  "Income Tax (Earnings and Pension) Act 2003. Social security pensions, as defined in s. 577 are taxed under Pt. 9, Ch. 5". The relevant clause in the legislation as I read it is [my bold]:

Chapter 3 United Kingdom pensions: general rules

569 United Kingdom pensions

(1)This section applies to any pension paid by or on behalf of a person who is in the United Kingdom. (that is me)

(2)But this section does not apply to a pension if any provision of Chapters 5 to 14 of this Part applies to it.

(3)For pensions paid by or on behalf of a person who is outside the United Kingdom, see Chapter 4 of this Part.

570“Pension”: interpretation

In this Chapter “pension” includes a pension which is paid voluntarily or is capable of being discontinued.

571Taxable pension income

If section 569 applies, the taxable pension income for a tax year is the full amount of the pension accruing in that year irrespective of when any amount is actually paid.

572Person liable for tax

If section 569 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.

The relevant legislation link is here

I have posted this additional detail in case it is of use to others reaching state pension age towards the end of the tax year. 

You're looking at the wrong part. It is chapter 5 of part 9 you want for the state pension.

https://www.legislation.gov.uk/ukpga/2003/1/part/9/chapter/5