Widowed Basic State Pension pushed into paying tax

solidpro

Ok just filling in the gaps. She was born in '43, so ignore the WASPI assumptions. My bad, I was misunderstood. It was the only figure I could find that matched. She never had mentioned any increase due to her dead husband's state pension choices, but it sounds the most likely scenario. I have explained she is only being taxed because she is better off (ignoring COL/inflation/etc) but I think she has conveniently (or not) not noticed this increase. I will have to now try to find out if that is why.

She doesn't get any pension credits and due to this amount of pension, isn't eligable. She has no other form of income or has any debt. Just owns a leasehold 2 bedroom flat which she doesn't want to move from.

p00hsticks

solidpro said:

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.

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.

Going by my experience she is likely to have received a letter from DWP 2-3 months after her husbands death to advise her of any change to her State Pension amount and how it is made up. 

P.S. Any reference to WASPE tends to get many peoples backs up on this forum and is probably the reason for some of the more hardline comments. 

eskbanker

solidpro said:

Ok just filling in the gaps...

It can undoubtedly be challenging to extricate financial information from those of earlier generations who are fiercely independent, reluctant to accept the need for help, and inherently private, but in order for you to give her meaningful advice you will need to fill in plenty more gaps if there's any suggestion that she's being charged something that she shouldn't be - have you actually seen the demand, what it relates to, how it's calculated, etc?

squirrelpie

WASPI is something of a trigger word around here, as you might have picked up. So attributing things to "WASPI" without any fact checking is perhaps what caused people to react poorly to your enquiry. You say "Apparently this is the first demand she has ever had for income tax since her husband died" and follow it with "Maybe that isn't true". But it is quite likely to be true and if you stop and think about why before posting again (it's been explained in this thread) you might get a better reaction next time

german_keeper

She should receive a pension uprating letter every year, usually Feb/March. If you can get sight of that it should give you some more useful information about how it is calculated. You could then google any terminology you don't understand.

Sarahspangles

solidpro said:

Ok just filling in the gaps. She was born in '43, so ignore the WASPI assumptions. My bad, I was misunderstood. It was the only figure I could find that matched. She never had mentioned any increase due to her dead husband's state pension choices, but it sounds the most likely scenario. I have explained she is only being taxed because she is better off (ignoring COL/inflation/etc) but I think she has conveniently (or not) not noticed this increase. I will have to now try to find out if that is why.

She doesn't get any pension credits and due to this amount of pension, isn't eligable. She has no other form of income or has any debt. Just owns a leasehold 2 bedroom flat which she doesn't want to move from.

LOL you’re stuck in the middle of your MIL and people who are still reeling from the budget and being asked a zillion questions nobody can answer yet.

Her circumstances will be similar to my MIL. When FIL passed away she was awarded more pension, as she inherited some of his. If your IL’s affairs were simple and this happened relatively recently it would just be some letters she may or may not have read, leading to different amounts being deposited into what was a joint account.

It’s worth understanding how Simple Taxation works if she’s going to need help with it. https://www.gov.uk/government/publications/pensioners-and-tax-communications-materials/simple-assessment-guide-for-pensioners

Marcon

solidpro said:

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.

No, it was a simple question, to be taken at face value, rather than taking offence. I couldn't work out where on earth you were coming from - hence the request for more information.

Triumph13

Referring to the perfectly normal Triple Lock increase as a 'Tory Bribe' probably also added to the impression that you were here with an agenda.

squirrelpie

FIREDreamer said:

You mean WASPE

Sorry, over my head. I have no idea what you mean. I'm referring to https://www.waspi.co.uk/

Dazed_and_C0nfused

Audaxer said:

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.

I wonder if the op has simply seen that £40 interest is (no doubt correctly) one element of the calculation but not bothered to check how this was then taxed?

Which from what the they have posted would be £40 x 0% = £0.00 😉