Taxing of State Pension

pinnks

KevinG said:

I think this whole thread proves how utterly stupid this system is and how the tax should be based purely on amounts actually paid and received, which would be so much easier to implement and understand for all parties. 

Perhaps but you'll have to lobby your MP to get the law changed - good luck with that, lol

KevinG

pinnks said:

KevinG said:

I think this whole thread proves how utterly stupid this system is and how the tax should be based purely on amounts actually paid and received, which would be so much easier to implement and understand for all parties. 

Perhaps but you'll have to lobby your MP to get the law changed - good luck with that, lol

I doubt that it is enshrined in law, rather custom and practice. 

Dazed_and_C0nfused

KevinG said:

pinnks said:

KevinG said:

I think this whole thread proves how utterly stupid this system is and how the tax should be based purely on amounts actually paid and received, which would be so much easier to implement and understand for all parties. 

Perhaps but you'll have to lobby your MP to get the law changed - good luck with that, lol

I doubt that it is enshrined in law, rather custom and practice. 

Sections 577 and 578 apply here,

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

KevinG

Dazed_and_C0nfused said:

KevinG said:

pinnks said:

KevinG said:

I think this whole thread proves how utterly stupid this system is and how the tax should be based purely on amounts actually paid and received, which would be so much easier to implement and understand for all parties. 

Perhaps but you'll have to lobby your MP to get the law changed - good luck with that, lol

I doubt that it is enshrined in law, rather custom and practice. 

Sections 577 and 578 apply here,

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

OK, I trust you, I'm not going to read the whole thing!

molerat

KevinG said:

Dazed_and_C0nfused said:

KevinG said:

pinnks said:

KevinG said:

I think this whole thread proves how utterly stupid this system is and how the tax should be based purely on amounts actually paid and received, which would be so much easier to implement and understand for all parties. 

Perhaps but you'll have to lobby your MP to get the law changed - good luck with that, lol

I doubt that it is enshrined in law, rather custom and practice. 

Sections 577 and 578 apply here,

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

OK, I trust you, I'm not going to read the whole thing!

You don't have to read the whole thing

578Taxable pension income

If section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid.

pinnks

Thanks guys - save me some one-fingered typing to say the same thing...

Qyburn

As far as I can determine this means everyone gets taxed on somewhere between 0 and 6 day's pension that they weren't actually paid. (It might be between 1 and 7, I don't know if it ever works out so your first payment is a full week).

Sticking to weekly payment is there ever a counter balance, some taxed on less than they receive?

Sarahspangles

Qyburn said:

As far as I can determine this men's everyone gets taxed on somewhere between 0 and 6 day's pension that they weren't actually paid. (It might be between 1 and 7, I don't know if it ever works out so your first payment is a full week).

Sticking to weekly payment is there ever a counter balance, some taxed on less than they receive?

Isn’t this just the effect of payment in arrears? At the end of your life, your final pension payment lands a few days after you pass away. Your personal allowance doesn’t expire with you, you get your full personal allowance for that tax year. So it’s back in balance after that payment, though you’re not likely to care.

LHW99

Or does it all come out in the (first tax year's) wash?

pinnks

Being taxed on a received (cash) basis or an accruals (entitlement) basis is ultimately just a timing issue, unless different tax rates are involved between years X and Y...