Advice needed please

Parabotomist

I can take my state pension on 30th September (my 66th birthday). I have been awarded a state pension if £12,014p or £1001 a month) (which is below the Personal Allowance).

In 2019 I was awarded an Tier 1 NHS Ill Health Retirement Policy, which is currently £15,073.32p (or £1256.11p a month.

If i take my pension how much of the NHS Pension will I lose in tax? I dont want to end up.not being able to live.

la531983

So you are getting £15k a year now which you will be getting taxed on, from September you will be getting £27k a year, and be taxed on that.

Why on earth do you think you would be worse off if you took your State Pension? Yes the NHS pension will be taxed more (as they cant take tax off the State one) but you are getting the State one in full to more than make up for that.

Brie

So £12014+15073.32=27087.32 income
£27087.32-12570=14517.32 taxable income
£14517.32x20%=2903.46 tax to be deducted
£27087.32-2903.46=24183.86 pension paid to you annually
£24183.86/12=2015.32 paid monthly

The tax will be deducted from your NHS pension only so will look like it's taking a big hit but no tax will be deducted from the SP so that's ok.  

SP will be paid every 4 weeks not monthly but that shouldn't change the amount you receive.

molerat

You will have 20% of £12K tax deducted from your NHS pension, £200 pm, but will overall be 80% of £12K ,so £9.6K / £800 pm, better off.

gm0

Tax treatment of the two pensions explained upthread.

Apart from making the application.  

The only other decision you need to know exists.  Is this

https://www.gov.uk/deferring-state-pension

Basically you can "wait" before starting claiming and get a bit extra when you do start.  

But you may not live long enough to get back in "extra" later the months foregone by not starting immediately.  Nobody knows how long they will live.  It is calculated around how long we live on average.  Some win. Some lose. 

Most people need to start their State Pension and get on with it.   With the limited information about your household provided - it is fairly unlikely to be of interest - but it as well you are aware of it existing before applying and starting SP.

There isn't much else to think about.  When you have a private pension alongside SP.  

Pension Credit for low income and the access it in turn gateways to a few other things - will not generally apply.  
Your NHS pension pushes you sufficiently up the income deciles that this will likely not be relevant here. 

But other issues in your household - disability, dependents, care etc. may complicate your relationship with DWP. 

So for completeness.  Also:

https://www.gov.uk/pension-credit/eligibility

SVaz

Unless you are going to lose a load of benefits by taking your State pension,  what on earth makes you think you’ll be worse off?  

If you ARE getting a load of means tested benefits though,  you would be treated as though you get your SP anyway as soon as you are eligible,  whether you defer or not. 

Dazed_and_C0nfused

SVaz said:

Unless you are going to lose a load of benefits by taking your State pension,  what on earth makes you think you’ll be worse off?  

If you ARE getting a load of means tested benefits though,  you would be treated as though you get your SP anyway as soon as you are eligible,  whether you defer or not. 

And the op will now lose all the savings starter rate band which was likely to have been available in previous years.

Which isn't the end of the world, or may not even be relevant to the op.  But it does upset some people because of the 40% tax hit (really two lots of 20%) that this can create.

amibovvered

Parabotomist said:

I can take my state pension on 30th September (my 66th birthday). I have been awarded a state pension if £12,014p or £1001 a month) (which is below the Personal Allowance).

I'm not quite sure of the relevance of this? Your NHS pension already exceeds the personal allowance.