BIG ISSUE WHEN STATE PENSION IS ABOVE TAX THRESHOLD

ROG

I have just received this answer from my local council benefit office - 
We will not be adjusting income for the past year when your HMRC tax bill is received

My state pension this financial year is more than my tax allowance so is being used as a test case by my local councillor

That means from April 2027 under the current rules those with just state pension as their only taxable income will not only get less benefits but also receive a HMRC tax bill to pay

Have I missed something in my assessment of this situation?

Dazed_and_C0nfused

ROG said:

I have just received this answer from my local council benefit office - 
We will not be adjusting income for the past year when your HMRC tax bill is received

My state pension this financial year is more than my tax allowance so is being used as a test case by my local councillor

That means from April 2027 under the current rules those with just state pension as their only taxable income will not only get less benefits but also receive a HMRC tax bill to pay

Have I missed something in my assessment of this situation?

I know nothing about council benefits but you are correct that if your only source of taxable income is State Pension and that exceeds your Personal Allowance of £11,310 or £12,570 then you can expect a Simple Assessment calculation (bill) from HMRC.

For the current tax year the tax would be payable by 31 January 2027.  It would be better payable a bit later if HMRC are late sending the Simple Assessment calculation as you should always be given 3 months to pay it.

Silvertabby

So, they are saying that your income for Council benefits purposes is your pension before you receive/pay your tax bill, just like any other bill.  Can't understand why you are being used as a 'test case' though - there are Ks of pensioners out there on just the (old rules) State pension who already receive more than the new single tier pension and so have been receiving Simple Assessment tax bills for years.  Some of them must be claiming housing benefit, even if they don't qualify for other Council benefits, such as reduced Council Tax. 

But, I see your point and I do sympathise.  

ROG

I think simple assessment tax bills are different to having a tax bill at the end of the financial year but happy to be corrected on this point

Dazed_and_C0nfused

ROG said:

I think simple assessment tax bills are different to having a tax bill at the end of the financial year but happy to be corrected on this point

Simple Assessment is specifically used for the scenario you have outlined.

https://www.litrg.org.uk/tax-nic/how-tax-collected/simple-assessment

NedS

One solution is to have another form of taxed income from which the tax owed can be deducted. A part time job, maybe? I know plenty of pensioners do, especially those on SP only.

born_again

ROG said:

I have just received this answer from my local council benefit office - 
We will not be adjusting income for the past year when your HMRC tax bill is received

My state pension this financial year is more than my tax allowance so is being used as a test case by my local councillor

That means from April 2027 under the current rules those with just state pension as their only taxable income will not only get less benefits but also receive a HMRC tax bill to pay

Have I missed something in my assessment of this situation?

That is dependent on personal tax allowance not being raised.