Tax on pension

HardWorker_55

Hi, Looking for some advise for my Mum please!  she receives her state pension but also receives a small pension from her old employer. She is taxed on her employer pension and for the 2nd year running she has received a tax bill which is essence amounts to the total amount of employer pension she has received?  Is this right and can we do anything about it?

she doesn’t have a lot of money and it just doesn’t seem fair that she is taxed twice- surely this isn’t right!

eskbanker

It doesn't sound right but impossible to comment further without sight of the relevant figures, so please share the detail of the calculation.

Ref44

How much state pension and occupational pension per year? 

Albermarle

Sounds a bit odd, but you need to supply some figures as follows:

Annual state pension ( not everyone gets the same )
Ex workplace annual pension
Tax code for above .
So you say she pays tax every month on this pension, and then gets an extra tax bill later ?

lr1277

I know you say your mum doesn't have much money but does she get more than £1000 per year in savings interest?

If she does this will affect her total income and hence the amount of tax she pays.

Edited to add: Does she have any other (untaxed at source) income? If so would you care to give us some details?

I speak from experience of helping my mum with her tax affairs.

Isthisforreal99

Possibly a large K code in operation and as PAYE can only collect 50% of the pension source then an underpayment will arise.

As above - need some figures.

HardWorker_55

On her tax bill it shows - Private pension scheme £1373.52 / State pension £17182.88 / Untaxed interest £102.00 / Personal allowance £12570.00 . My Dad has passed away so my Mum receives some of his pension but has no other income amounts   

[Deleted User]

HardWorker_55 said:

On her tax bill it shows - Private pension scheme £1373.52 / State pension £17182.88 / Untaxed interest £102.00 / Personal allowance £12570.00 . My Dad has passed away so my Mum receives some of his pension but has no other income amounts   

In that instance she will definitely always be underpaid. The tax on the state pension alone would be £922.40 and, as others have said, the maximum tax that can be taken from the small pension is £686 (50%). Her total tax liability is £1197.20 based on those figures - £511.20 underpaid?

There is no mechanism to deduct tax directly from state pension. 

Treat it as an interest free loan!

lincroft1710

HardWorker_55 said:

On her tax bill it shows - Private pension scheme £1373.52 / State pension £17182.88 / Untaxed interest £102.00 / Personal allowance £12570.00 . My Dad has passed away so my Mum receives some of his pension but has no other income amounts   

 

That state pension amount seems high

sheramber

17182 +1373 = 18555
less                    12570
                            5985 @ 20% = 1197 tax due.

p00hsticks

lincroft1710 said:

HardWorker_55 said:

On her tax bill it shows - Private pension scheme £1373.52 / State pension £17182.88 / Untaxed interest £102.00 / Personal allowance £12570.00 . My Dad has passed away so my Mum receives some of his pension but has no other income amounts   

 

That state pension amount seems high

It's around £330 a week - about the highest I think it could be under the old pre-2016 rules but not unbelievable.
The OP says the recipient and inherited much of her late husbands pension and this can significantly boost the amount (my mothers went from £106 to £296 a week when my dad died).