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Widowed Basic State Pension pushed into paying tax

solidpro
solidpro Posts: 547 Forumite
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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? 
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Comments

  • Ayr_Rage
    Ayr_Rage Posts: 1,648 Forumite
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    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? 
    You do not appear to understand WASPI at all.

    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.


  • eskbanker
    eskbanker Posts: 33,380 Forumite
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    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.
    If she reached state pension age before 2016, she'll be on the old state pension, not the new (£11.5K) one, that usually dominates discussions.

    solidpro said:
    The demand for tax is something like £190 + £40 interest.
    If the tax relates to 2023/24, then it would be based on her income that year, not what she's on since April 2024, but it also shouldn't involve any interest penalty, as it's not due yet.  Does this mean it relates to an earlier tax year, even more annual increases ago?
  • p00hsticks
    p00hsticks Posts: 13,593 Forumite
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    edited 31 October at 4:37PM
    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.

    As others have said, nothing to do with WASPI.

    £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.
  • Sarahspangles
    Sarahspangles Posts: 2,220 Forumite
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    edited 31 October at 4:33PM
    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’s likely nothing to do with WASPE, people aren’t receiving payouts. Though separately, there are some exercises underway to correct mistakes in calculating widow’s pensions. If she was affected by these, she would have had a letter.

    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.
  • hugheskevi
    hugheskevi Posts: 4,208 Forumite
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    edited 31 October at 4:50PM
    It took me ages to figure out why her 'basic state pension' (without pension credits of any kind) was £13700 instead of £11500
    From your figures, it appears she is in receipt of new State Pension for those reached State Pension age after April 2016, not the pre 2016 Basic State Pension. Or she has an old State Pension of a value slightly above the new State Pension full amount.
    I used some backwards reasoning that she is getting some kind of WASPI uplift.
    There is no such thing as a 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.
    The full rate of the new State Pension and the full rate of the Basic State Pension increased in April 2024 by the Triple Lock value of 8.5%, reflecting average earnings growth.

    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%
    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
    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.

    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.
    I did some googling and can't see anyone talking about this situation
    Look around this forum for "Simple Assessment" and read about it at this link.
    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? 
    Simple Assessment has nothing to do with WASPI. WASPI argue that women with a State Pension age over 60 but under 65 should retrospectively be paid State Pension for all years between 60-65. Their case has been rejected in law, some administrative deficiencies identified by the Parliamentary Ombudsman remain to be addressed.

    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.
  • Stubod
    Stubod Posts: 2,322 Forumite
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    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...."
  • Marcon
    Marcon Posts: 12,194 Forumite
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    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.

    What bribe? 

    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? 
    What are you talking about? Where do so-called WASPI women come into this? I doubt anyone else has reached your conclusion, because you are quite simply entirely misguided.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • solidpro
    solidpro Posts: 547 Forumite
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    edited 31 October at 4:53PM
    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:

    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.

    As others have said, nothing to do with WASPI.

    £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.
    I'll try and do some more digging. Apparently this is the first demand she has ever had for income tax since her husband died. Maybe that isn't true. I'm just going on what I can get out of her and what I can find from what has arrived in the post.
  • Audaxer
    Audaxer Posts: 3,547 Forumite
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    solidpro said:
    The demand for tax is something like £190 + £40 interest.

    If she is now £1,150 above her personal allowance threshold, that is taxed at 20% which amounts to £230, so the demand is for the correct total. I'm just not sure why it would show part of that sum as interest as it should all be tax.
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