Undeclared Income But Still Below The Basic Threashold For Tax

jam0366

I receive a small works pension since 2011. Started receiving Carer Allowance in 2020. The two together have always been below 12,570 by at least 2,000. Saving have never been more than 1,500. I've now just started to claim my State Pension and after downloading the App discovered that HMRC do not know about my Carer Allowance, I wrongly thought that the DWP notified them automatically. Stupid of me so I need to rectify this. Should I phone them up with the figures or is there anything I need to do first? Thank you for any comments/advice

Dazed_and_C0nfused

jam0366 said:

I receive a small works pension since 2011. Started receiving Carer Allowance in 2020. The two together have always been below 12,570 by at least 2,000. Saving have never been more than 1,500. I've now just started to claim my State Pension and after downloading the App discovered that HMRC do not know about my Carer Allowance, I wrongly thought that the DWP notified them automatically. Stupid of me so I need to rectify this. Should I phone them up with the figures or is there anything I need to do first? Thank you for any comments/advice

Have you applied for Marriage Allowance?

What will your total taxable income from pension, Carers Allowance and State Pension be this tax year?

For State Pension just multiply your weekly award x number of weeks you will be entitled to in this tax year, ignore the payments from DWP.

jam0366

Thanks for reply. No to Marriage Allowance,. Taxable income for year end April 2025: Pension 5,000 Carer Allowance 5,260 and 2 weeks of State Pension 440 so 10,700 total income.

Bookworm105

jam0366 said:

Thanks for reply. No to Marriage Allowance,. Taxable income for year end April 2025: Pension 5,000 Carer Allowance 5,260 and 2 weeks of State Pension 440 so 10,700 total income.

ok for 24/25 then
but for 25/26 you are required to register for self assessment tax return as the state pension is taxable income and as you do not have an employment through which a tax code could collect tax owed you will instead need to self assess.

please note comment from Dazed that the amount you declare for state pension is the amounts on your notification letters, not what you receive in your bank (there is a timing difference which the SA process will (after the event) spot if you do it wrong.

Check how to register for Self Assessment - GOV.UK

swingaloo

Doesn't your carers allowance stop now your state pension has started?

Dazed_and_C0nfused

swingaloo said:

Doesn't your carers allowance stop now your state pension has started?

In theory you can get both but on the amount the op has posted £220/week) I think it's going to be State Pension only from now on.

https://www.carersuk.org/help-and-advice/financial-support/carer-s-allowance/carer-s-allowance-your-state-pension-plus-other-benefits/

[Deleted User]

Carers allowance should cease (but I would be informing DWP to make sure). Accordingly the tax code at the pension should reflect receipt of state pension, likely £230 pw from April. 

No need for self-assessment 

jam0366

Thank you, yes Carer Allowance has now stopped. They sent me a letter to that effect. As I expect to now pay tax I was hoping that it would be collected via my work pension. I'm mainly concerned that I have not declared my carer allowance even though it doesn't meet the threashold for tax in previous years. I think I better call them next week for their take on this. Many thanks for all the help

p00hsticks

Bookworm105 said:

jam0366 said:

Thanks for reply. No to Marriage Allowance,. Taxable income for year end April 2025: Pension 5,000 Carer Allowance 5,260 and 2 weeks of State Pension 440 so 10,700 total income.

but for 25/26 you are required to register for self assessment tax return as the state pension is taxable income and as you do not have an employment through which a tax code could collect tax owed you will instead need to self assess.

The OP says that they are also in receipt of a works pension - depending on how small, the tax could be collected via that by a tax code adjustment. Even if it's too small (I think they are only allowed to reduce the pension by 50% at most) then there is no need to register for self assessment unless there are reasons for needing to do other than being in receipt of state pension. According to gov.uk HMRC will write at the end of the tax year to say how much tax is owed and request payment. 
Tax when you get a pension: How your tax is paid - GOV.UK

[Deleted User]

jam0366 said:

Thank you, yes Carer Allowance has now stopped. They sent me a letter to that effect. As I expect to now pay tax I was hoping that it would be collected via my work pension. I'm mainly concerned that I have not declared my carer allowance even though it doesn't meet the threashold for tax in previous years. I think I better call them next week for their take on this. Many thanks for all the help

I believe that you are worrying completely unnecessarily. There was no requirement to declare your carers allowance as you incurred no tax liability as a result. There is no loss to HMRC. You would be wasting both your and their time. 

You will pay tax from April and this will be collected at your occupational pension source as you have indicated. Expect a tax code to reflect that soon or check on your personal tax account. 

[Deleted User]

p00hsticks said:

Bookworm105 said:

jam0366 said:

Thanks for reply. No to Marriage Allowance,. Taxable income for year end April 2025: Pension 5,000 Carer Allowance 5,260 and 2 weeks of State Pension 440 so 10,700 total income.

but for 25/26 you are required to register for self assessment tax return as the state pension is taxable income and as you do not have an employment through which a tax code could collect tax owed you will instead need to self assess.

The OP says that they are also in receipt of a works pension - depending on how small, the tax could be collected via that by a tax code adjustment. Even if it's too small (I think they are only allowed to reduce the pension by 50% at most) then there is no need to register for self assessment unless there are reasons for needing to do other than being in receipt of state pension. According to gov.uk HMRC will write at the end of the tax year to say how much tax is owed and request payment. 
Tax when you get a pension: How your tax is paid - GOV.UK

I estimate that tax on the state pension of 230 pw and the occupational pension of £5000 (as stated by the op) will be £878. A code of 61L should suffice (610 of personal allowances remain after the state pension)