4 days of pension paid in next tax year reducing personal allowance

Lightspark

I started getting a full state pension in March 2025 and had a income below the personal allowance for that financial year. The last 4 days 2nd to 5th April inclusive were paid on 29th April with 14 days for tax year 25/26. 4 days at the rate 24/25 is £126.40 and would now reduce my personal allowance by that much and hence tax of £25.28.

What is the legal position and who (DWP or HM Revenue) and when should I be applying to get the £25.80 back accrued by the end of the financial year25/26?    

Dazed_and_C0nfused

Lightspark said:

I started getting a full state pension in March 2025 and had a income below the personal allowance for that financial year. The last 4 days 2nd to 5th April inclusive were paid on 29th April with 14 days for tax year 25/26. 4 days at the rate 24/25 is £126.40 and would now reduce my personal allowance by that much and hence tax of £25.28.

What is the legal position and who (DWP or HM Revenue) and when should I be applying to get the £25.80 back accrued by the end of the financial year25/26?    

When you are paid is of no relevance for State Pension.

It is your entitlement in each tax year which is taxed.  So if by "full State Pension" you mean £230.25/week then you are to be taxed on £11,973.  Or possibly £11,963.95.

Also, the only things which can reduce your Personal Allowance are applying for Marriage Allowance or having adjusted net income of £100,002 or more.

If you want to take this up with your MP the relevant legislation is at section 578 here,
https://www.legislation.gov.uk/ukpga/2003/1/part/9/chapter/5

tetrarch

IANAE, but If the Earned Income Rules are the same as the Savings Income Rules then it is the date of payment that matters, not the earnings period.

Two-year NS bonds are taxed in the tax year in which the interest is received, we had this confirmed by a tax accountant who helped us with our 2023/24 returns, where annual interest was paid on 4th, 5th and 6th April 2024, but only the 4th and 5th payments were within that tax year

Regards

Tet

Dazed_and_C0nfused

tetrarch said:

IANAE, but If the Earned Income Rules are the same as the Savings Income Rules then it is the date of payment that matters, not the earnings period.

Two-year NS bonds are taxed in the tax year in which the interest is received, we had this confirmed by a tax accountant who helped us with our 2023/24 returns, where annual interest was paid on 4th, 5th and 6th April 2024, but only the 4th and 5th payments were within that tax year

Regards

Tet

Date of payment is irrelevant for State Pension purposes.

Marcon

tetrarch said:

IANAE, but If the Earned Income Rules are the same as the Savings Income Rules then it is the date of payment that matters, not the earnings period.

Pensions (including state pension) are taxed on the accruals basis.

Full explanation here if you're interested in the fine detail: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020 (which will also answer OP's original question).

molerat

tetrarch said:

IANAE, but If the Earned Income Rules are the same as the Savings Income Rules then it is the date of payment that matters, not the earnings period.

Two-year NS bonds are taxed in the tax year in which the interest is received, we had this confirmed by a tax accountant who helped us with our 2023/24 returns, where annual interest was paid on 4th, 5th and 6th April 2024, but only the 4th and 5th payments were within that tax year

Regards

Tet

Which is irrelevant for the state pension

https://www.legislation.gov.uk/ukpga/2003/1/part/9/chapter/5

578 Taxable pension income

If section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid. 

tetrarch

Very happy to be corrected. Thank you for the link.

Apols to the OP for any confusion

Regards

Tet

Qyburn

Lightspark said:

I started getting a full state pension in March 2025 and had a income below the personal allowance for that financial year. The last 4 days 2nd to 5th April inclusive were paid on 29th April with 14 days for tax year 25/26. 

Looking at my own figures for the first year I received SP, it seems the tax liability is based on the number of full weeks starting from your birthday.  So depending on when exactly you started receiving it in March, there may be more than four days included in 2024/25.

Lightspark

Dazed_and_C0nfused said:

Lightspark said:

I started getting a full state pension in March 2025 and had a income below the personal allowance for that financial year. The last 4 days 2nd to 5th April inclusive were paid on 29th April with 14 days for tax year 25/26. 4 days at the rate 24/25 is £126.40 and would now reduce my personal allowance by that much and hence tax of £25.28.

What is the legal position and who (DWP or HM Revenue) and when should I be applying to get the £25.80 back accrued by the end of the financial year25/26?    

When you are paid is of no relevance for State Pension.

It is your entitlement in each tax year which is taxed.  So if by "full State Pension" you mean £230.25/week then you are to be taxed on £11,973.  Or possibly £11,963.95.

Also, the only things which can reduce your Personal Allowance are applying for Marriage Allowance or having adjusted net income of £100,002 or more.

If you want to take this up with your MP the relevant legislation is at section 578 

Thank you for your reply and the Act section, I can now see payment dates for pensions are ignore and looking at my tax code for 25/26 that is the case. HM Revenue has used a figure of £11963. I don't see how this figure is arrived at. Likely I am wrong but I thought it would be 1 day (6th April25 old rate) at £11502.40/365+(new rate) £11973(364/365) = £11,971.70

How do you arrive at your two figures quote?  

Lightspark

tetrarch said:

Very happy to be corrected. Thank you for the link.

Apols to the OP for any confusion

Regards

Tet

Thanks for your reply

Lightspark

Qyburn said:

Lightspark said:

I started getting a full state pension in March 2025 and had a income below the personal allowance for that financial year. The last 4 days 2nd to 5th April inclusive were paid on 29th April with 14 days for tax year 25/26. 

Looking at my own figures for the first year I received SP, it seems the tax liability is based on the number of full weeks starting from your birthday.  So depending on when exactly you started receiving it in March, there may be more than four days included in 2024/25.

Thanks for your reply. My birthday is 19 March, so got payment for 14 days to and incl 1 April 25 and hence 4 days payment included in payment on 29 April for financial year 24/25.