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

molerat

Lightspark said:

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?  

The only time you get "days" of pension paid is at the start of your retirement, after then it is weeks.  The pension increase is the week after the start of the tax year so you get 1 week at the old rate and 51 new deducted from your coding. For 25-26 that is 1 x £221.20 + 51 x £230.25 = £11963(.95).  You will see two amounts if you delve into your on line tax account, your tax code based on the above and on your income page it will be shown as 52 x £230.25 = £11973.

Dazed_and_C0nfused

Lightspark said:

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?  

It's exactly how @molerat has now explained.

HMRC's PAYE Manual has more info here.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76030

jem16

Lightspark said:

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. 

It doesn’t work like that as it’s based on entitlement and always in whole days apart from the very start of your pension.

As your payment day is a Tuesday your first full week of entitlement is 25th March and second week is 1st April. You also had 7 days from 19th March to 25th inclusive. 

So technically your liability for 2024/25 is actually three weeks. So add whatever your weekly state pension amount was for last year (times 3) to the rest of your income for 2024/25. Whatever is above £12,570 will be taxed at 20%.

Dazed_and_C0nfused

jem16 said:

Lightspark said:

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. 

It doesn’t work like that as it’s based on entitlement and always in whole days apart from the very start of your pension.

As your payment day is a Tuesday your first full week of entitlement is 25th March and second week is 1st April. You also had 7 days from 19th March to 25th inclusive. 

So technically your liability for 2024/25 is actually three weeks. So add whatever your weekly state pension amount was for last year (times 3) to the rest of your income for 2024/25. Whatever is above £12,570 will be taxed at 20%.

Unless some of it needs to be taxed at 0% or 19% 😉

jem16

Dazed_and_C0nfused said:

jem16 said:

Lightspark said:

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. 

It doesn’t work like that as it’s based on entitlement and always in whole days apart from the very start of your pension.

As your payment day is a Tuesday your first full week of entitlement is 25th March and second week is 1st April. You also had 7 days from 19th March to 25th inclusive. 

So technically your liability for 2024/25 is actually three weeks. So add whatever your weekly state pension amount was for last year (times 3) to the rest of your income for 2024/25. Whatever is above £12,570 will be taxed at 20%.

Unless some of it needs to be taxed at 0% or 19% 😉

True although I was going with the fact he used 20% in his opening post. 

Lightspark

jem16 said:

Lightspark said:

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. 

It doesn’t work like that as it’s based on entitlement and always in whole days apart from the very start of your pension.

As your payment day is a Tuesday your first full week of entitlement is 25th March and second week is 1st April. You also had 7 days from 19th March to 25th inclusive. 

So technically your liability for 2024/25 is actually three weeks. So add whatever your weekly state pension amount was for last year (times 3) to the rest of your income for 2024/25. Whatever is above £12,570 will be taxed at 20%.

Thanks, using whole weeks again instead of days, can see it would be 3 weeks; however it would still leave me below the personal allowance for 24/25, but close, so ok. 

Lightspark

molerat said:

Lightspark said:

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?  

The only time you get "days" of pension paid is at the start of your retirement, after then it is weeks.  The pension increase is the week after the start of the tax year so you get 1 week at the old rate and 51 new deducted from your coding. For 25-26 that is 1 x £221.20 + 51 x £230.25 = £11963(.95).  You will see two amounts if you delve into your on line tax account, your tax code based on the above and on your income page it will be shown as 52 x £230.25 = £11973.

Thanks for showing the cals, But what gets me - you get a letter from DWP telling you the increase of 4.1% from the 7 April 25 and somewhere on the gov site I read increase is from the first Monday on or after the 6th April, so 7 April 25. It would be a lot better for everyone if they explained how they calculate it, would only take a couple of lines. I dare say it may be on the system or Act somewhere, but if they (DWP or HM Revenue) are going to send a letter anyway? - Rant over. & thanks to everyone that replied.       

jem16

Lightspark said:

molerat said:

Lightspark said:

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?  

The only time you get "days" of pension paid is at the start of your retirement, after then it is weeks.  The pension increase is the week after the start of the tax year so you get 1 week at the old rate and 51 new deducted from your coding. For 25-26 that is 1 x £221.20 + 51 x £230.25 = £11963(.95).  You will see two amounts if you delve into your on line tax account, your tax code based on the above and on your income page it will be shown as 52 x £230.25 = £11973.

Thanks for showing the cals, But what gets me - you get a letter from DWP telling you the increase of 4.1% from the 7 April 25 and somewhere on the gov site I read increase is from the first Monday on or after the 6th April, so 7 April 25. It would be a lot better for everyone if they explained how they calculate it, would only take a couple of lines. I dare say it may be on the system or Act somewhere, but if they (DWP or HM Revenue) are going to send a letter anyway? - Rant over. & thanks to everyone that replied.       

My letter about the increase told me exactly what date my increase would be applied from which was the 11th April 2025. Exactly when it took place that week depended on your payment day. 

It is actually laid out. I’ll try and find it again. 

Update : Here you go. 

https://researchbriefings.files.parliament.uk/documents/SN00260/SN00260.pdf