TAX ALLOWANCE ABOVE STATE PENSION AND BENEFITS

michaels

Nebulous2 said:

NOWOLD said:

michaels said:

I think the issue is that whilst they are supposed to be based on net, they are being calculated based on gross because this is what HMRC and reporting to the benefits givers because by default state pensions are paid gross with any tax liability being taken later.

EXACLY THAT

Does it matter? If my calculations are right, then you will only be paying around £130 a year in tax. Does that extra £130 you wont receive take you over a threshold for receiving benefits? 

Isn't the full state pension on its own over the pension credit limit? 

Then there is the argument that it is a voluntary situation. Giving up part of your allowance to pay tax and bring you under a threshold for benefits seems contrived. 

The same situation could apply to people repaying tax from previous years through their tax code. If somebody had underpaid their tax, had their code reduced to pay a deficit from previous years, would we expect them to then get means tested benefits? 

Benefits withdrawal rates can be high even without thresholds, that wrongly assessed 130 could easily result in 65 less benefits.

Pension credit is not the only benefit for low income pensioners, for example those who rent will likely get housing benefit even if over the pension credit threshold.

Benefits are generally assessed over specific periods, used to be mostly annual but now generally monthly so what matters is current period income, not what might have gone before to influence it.