We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Widowed Basic State Pension pushed into paying tax
solidpro
Posts: 547 Forumite
The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.
The demand for tax is something like £190 + £40 interest.
Anyway, so she is already on the breadline and we have to support her with lots of things, she feels a bit annoyed she is being suddenly getting income tax demands for 'no reason' - i.e. her circumstances haven't changed and doesn't feel richer (although I pointed out that the 8.4% increase of about £1154 is now about £900, so that's something - albeit still tough because we already have been filling in the shortfall gaps of being 'full state pension' means she doesn't get any support on any pension credit stuff)
I did some googling and can't see anyone talking about this situation - where I thought it would have put thousands of WASPI pensioners into this frustrating situation whereby they're asked to pay income tax which would not have happened if they had recieved a fair pension throughout their retirement, rather than uplifted (and compounded) at a later date. It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?
By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.
The demand for tax is something like £190 + £40 interest.
Anyway, so she is already on the breadline and we have to support her with lots of things, she feels a bit annoyed she is being suddenly getting income tax demands for 'no reason' - i.e. her circumstances haven't changed and doesn't feel richer (although I pointed out that the 8.4% increase of about £1154 is now about £900, so that's something - albeit still tough because we already have been filling in the shortfall gaps of being 'full state pension' means she doesn't get any support on any pension credit stuff)
I did some googling and can't see anyone talking about this situation - where I thought it would have put thousands of WASPI pensioners into this frustrating situation whereby they're asked to pay income tax which would not have happened if they had recieved a fair pension throughout their retirement, rather than uplifted (and compounded) at a later date. It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?
0
Comments
-
Its nothing to do with "WASPI", tax impacts everyone, the personal tax free allowance has been frozen and will continue to be frozen for several years (I think until 2028 but don't quote me), this has moved many people, pensioners and non pensioners into paying tax."You've been reading SOS when it's just your clock reading 5:05 "5
-
solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.
The demand for tax is something like £190 + £40 interest.
Anyway, so she is already on the breadline and we have to support her with lots of things, she feels a bit annoyed she is being suddenly getting income tax demands for 'no reason' - i.e. her circumstances haven't changed and doesn't feel richer (although I pointed out that the 8.4% increase of about £1154 is now about £900, so that's something - albeit still tough because we already have been filling in the shortfall gaps of being 'full state pension' means she doesn't get any support on any pension credit stuff)
I did some googling and can't see anyone talking about this situation - where I thought it would have put thousands of WASPI pensioners into this frustrating situation whereby they're asked to pay income tax which would not have happened if they had recieved a fair pension throughout their retirement, rather than uplifted (and compounded) at a later date. It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?
The April increase is the usual annual increase and if that took her over the personal allowance then the tax is due.
I don't think interest would be due unless a previous request for payment is late, suggest you check all previous correspondence.
3 -
solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.solidpro said:The demand for tax is something like £190 + £40 interest.0
-
solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
£13700 a year is over both the pre-2016 'basic' amount and the maximum post-2016 new State Pension amount. It's also over the basic tax allowance, and as State Pension is a taxable benefit that is not taxed at source, this means that if she has no other income such as a private pension from which the tax owed can be collected she wil lreceive a tax demand after the end of the tax year as you describe.
The most likely explanation for her receiving that much State Pension is that she falls under the old pre-2016 scheme and inherited some (much?) or her late husbands pension when he died. My father died earlier this year and my mothers State Pension has nearly tripled, to over £280 a week, as a result.1 -
solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.
The demand for tax is something like £190 + £40 interest.
Anyway, so she is already on the breadline and we have to support her with lots of things, she feels a bit annoyed she is being suddenly getting income tax demands for 'no reason' - i.e. her circumstances haven't changed and doesn't feel richer (although I pointed out that the 8.4% increase of about £1154 is now about £900, so that's something - albeit still tough because we already have been filling in the shortfall gaps of being 'full state pension' means she doesn't get any support on any pension credit stuff)
I did some googling and can't see anyone talking about this situation - where I thought it would have put thousands of WASPI pensioners into this frustrating situation whereby they're asked to pay income tax which would not have happened if they had recieved a fair pension throughout their retirement, rather than uplifted (and compounded) at a later date. It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?It sounds more like she inherited some of her husband’s pension, and his contributions included purchase of extra pension (S2P and SERPS) which is why it’s higher than basic. Her husband chose that pension provision for them both. This was common for the generation where women may have worked but paid a reduced ‘married women’s stamp’ and taken a break to raise children. The pension has now been increased through the pension triple lock and she’s better off. Nobody likes paying tax but she will be receiving a net increase. She will be better off than someone whose husband only had a basic pension.
If she’s not able to manage, and it’s not due to something like reluctance to downsize or debt repayments, you could check if there are any benefits she‘s eligible for.1 -
It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500I used some backwards reasoning that she is getting some kind of WASPI uplift.
It is likely she is in receipt of a payment in addition to the standard full new State Pension amount. This may be inherited State pension from her spouse, a protected payment derived from pre 2016 State Pension entitlement, or a deferred pension payment if she drew her State Pension after State Pension age.By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.
As her pension went up by 8.4% that further suggests an additional entitlement over the standard new State Pension amount, probably from inherited additional State Pension from her spouse. Those other payments increased by 6.7%
Tax is an individual responsibility, and it should come as no surprise that HMRC are requesting the amount of income tax due from her under standard income tax rules.she feels a bit annoyed she is being suddenly getting income tax demands for 'no reason' - i.e. her circumstances haven't changed and doesn't feel richer
Fiscal drag and frozen tax bands have been prominently covered in the media, and the tax bands and Personal Allowance should be well known to all as they have been unchanged since 2022.
Look around this forum for "Simple Assessment" and read about it at this link.I did some googling and can't see anyone talking about this situationI thought it would have put thousands of WASPI pensioners into this frustrating situation whereby they're asked to pay income tax which would not have happened if they had recieved a fair pension throughout their retirement, rather than uplifted (and compounded) at a later date. It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?
Whether or not pension had been paid prior to age 65 would have no bearing on the current position and the taxation of State Pension. No pension has been uplifted due to WASPI, nor will it be in future given the court verdict.
There are at least 1.36 million pensioners with a State Pension above the Personal Allowance and hence likely to be subject to income tax. Many of these pensioners will have other income where the tax due can be deducted by PAYE. If not, Simple Assessment is used.1 -
Becasue they have frozen the tax free limits the gap between the max new state pension and the tax free limit is narrowing, and it won't be that long before everybody on the new state pension will be paying some tax??
.."It's everybody's fault but mine...."0 -
solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
By using also the same detective enthusasm (we don't get much details out of her) we figured the tories gave every pensioner an 8.4% pension bribe in back in April, which would have taken her from £108 below the personal allowance threshold to £1150 or so above it.solidpro said:It seems the fact that many other WASPI women have been further excluded from the uplift is (perhaps rightfully) taking all the headlines.
So really, has anyone else reached the same conclusion, and does anyone think it's likely to change?Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
Christ, can you lot just be a little easier on me. I'm just trying to get to the bottom of this and could find no reference to it online and the only figures that seem to match the amount on her state pension was related to WASPI women. Bear in mind she isn't my mum, she is in her late 70s, and doesn't really understand much about what is happening. I'm just trying to help. I polite 'i think you're barking up the wrong tree' I can completely understand but a few words just saying 'what are you talking about' is really harsh.
Until being asked to look at this today I have had no reason to know what a widowed woman in their 70s should be getting and the paperwork I have doesn't seem to explain it, so I'm trying to work it out. That's why I've posted.
Ignoring all the blunt critism, this response seems to be perhaps what's happened:p00hsticks said:solidpro said:The widowed mother of my partner just got a demand from HMRC for about £250 income tax. She has been retired for a long time and never had to pay tax because she has always been below the personal allowance threshold. It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500 and I used some backwards reasoning that she is getting some kind of WASPI uplift.
£13700 a year is over both the pre-2016 'basic' amount and the maximum post-2016 new State Pension amount. It's also over the basic tax allowance, and as State Pension is a taxable benefit that is not taxed at source, this means that if she has no other income such as a private pension from which the tax owed can be collected she wil lreceive a tax demand after the end of the tax year as you describe.
The most likely explanation for her receiving that much State Pension is that she falls under the old pre-2016 scheme and inherited some (much?) or her late husbands pension when he died. My father died earlier this year and my mothers State Pension has nearly tripled, to over £280 a week, as a result.1 -
solidpro said:The demand for tax is something like £190 + £40 interest.0
Categories
- All Categories
- 346.5K Banking & Borrowing
- 251.3K Reduce Debt & Boost Income
- 451.3K Spending & Discounts
- 238.7K Work, Benefits & Business
- 614.1K Mortgages, Homes & Bills
- 174.7K Life & Family
- 251.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards