STATE PENSION TAXED AND HOUSING BENEFIT

Grumpy_chap

ROG said:

I earned state pension by working and accruing NI

The SP at the time of payment is treated as unearned income.
How the eligibility was accrued is irrelevant.

sheramber

ROG said:

On-the-coast said:

So why not cancel the “spouse transfer thing” immediately?

Cannot be cancelled until the start of a new tax year - HMRC rules
Also if I could do that then we would lose out jointly on tax free income

How much HB are you losing compared to the tax advantage your spouse gets?

ROG

sheramber said:

ROG said:

On-the-coast said:

So why not cancel the “spouse transfer thing” immediately?

Cannot be cancelled until the start of a new tax year - HMRC rules
Also if I could do that then we would lose out jointly on tax free income

How much HB are you losing compared to the tax advantage your spouse gets?

Not the general issue here as thousands could be thrown into this situation if/when the state pension is more than the tax allowance and there are not any other taxable incomes

NedS

ROG said:

sheramber said:

ROG said:

On-the-coast said:

So why not cancel the “spouse transfer thing” immediately?

Cannot be cancelled until the start of a new tax year - HMRC rules
Also if I could do that then we would lose out jointly on tax free income

How much HB are you losing compared to the tax advantage your spouse gets?

Not the general issue here as thousands could be thrown into this situation if/when the state pension is more than the tax allowance and there are not any other taxable incomes

You are correct that with tax allowances frozen, more and more people will get dragged into paying income tax (or more income tax). It's all part of fiscal drag.

To be fair, you should be getting the same amount of HB as it has always been calculated on your GROSS pension income. You are only worse off as you are now having to pay some income tax as your income is now more than your personal allowance, but this has nothing to do with HB.

ROG

I contacted HMRC and they stated that if state pension could be taxed at source like PAYE then the local authorities would use that after tax figure as that would be the figure the HMRC would be telling local authorities to use
very confusing !!

NedS

ROG said:

I contacted HMRC and they stated that if state pension could be taxed at source like PAYE then the local authorities would use that after tax figure as that would be the figure the HMRC would be telling local authorities to use
very confusing !!

HMRC do not have the authority to tell the LA what to use. HMRC simply share the data (both gross and net figures, tax deducted etc), and it is up to the LA to apply the HB regulations (the law) in the way that it is written.

In this case, HMRC can only share the gross figure as they do not tax state pension at source, but this is irrelevant as HB regs state it is the gross figure that should be used.

Do you accept that HB are correct in using the gross figure for your unearned (pension) income? If not, feel free to go to tribunal and argue the finer details of the law (HB Regs 36-40) with a magistrate.

ROG

Very odd as HMRC share the net from private pensions as well as the gross 

NedS

ROG said:

Very odd as HMRC share the net from private pensions as well as the gross 

Yes, the HMRC RTI feeds contain gross earnings (or pension payment), together with any tax, NI or pension conts that have been deducted at source by the employer/pension provider. All the information is there - what the LA choose to do with it is up to them (or more specifically what the law says).

As you've repeatedly pointed out, in your case there has been no deduction for tax at source as DWP do not deduct tax from State Pension payments at source, so HMRC can only share the gross information that has been reported to them by DWP. And as I've repeatedly pointed out, it makes absolutely no difference for HB as the law says that the GROSS amount is the amount to be used for State Pension when calculating entitlement to HB.

Which part of all this do you not understand?

ROG

Not arguing with the law just as to how odd it is

Isthisforreal99

ROG said:

Not arguing with the law just as to how odd it is

There's very much law that could be considered 'odd' but only an issue when it affects you as an individual?