What is the definition of income when assessing tax on pension

NoMore

NorthYorkie said:

NoMore said:

NorthYorkie said:

SouthCoastBoy said:

State pensioners with no other income will not have to pay income tax once over the tax threshold. Forget the detail whether just new state pension etc. Is it clear what the definition of income is? Is it taxable income or does it include money from savings, lump sum tax free cash etc. Any ideas?

Why do you say that "State pensioners with no other income will not have to pay income tax once over the tax threshold."? If their state pension exceeds the personal allowance of £12,570 then they will have to pay income tax.

If by "money from savings" you mean the interest credited on savings account, then yes, it is income (unless from an ISA). Also with regard to "lump sum tax free cash", there is a clue in the title.

You don't seem up to date with what the chancellor recently announced. 

State pensions will NOT be taxed under Labour, Rachel Reeves reveals to Martin Lewis

Agreed! I was not aware of this interview when I originally responded, However I would make a few points;

1. You should never take seriously anything that journalists and politicians say about tax.
2. This seems to be a case of Reeves making a commitment on the hoof. If it had always been intended to be introduced she would have mentioned it in her Budget speech. After all, this would be something she for which she would want the maximum credit and publicity
3. There is plenty of time for yet another U-turn

She did mention it in the budget speech 

“…at the same time we are ensuring that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through Simple Assessment from April 2027. “

https://www.gov.uk/government/speeches/budget-2025-speech

Granted it’s not very clear what that actually meant but the interview was supposed to clear it up. Whether it did or not is a different matter. 

Qyburn

NoMore said:

She did mention it in the budget speech 

“…at the same time we are ensuring that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through Simple Assessment from April 2027. “

But "do not have to pay small amounts of tax through Simple Assessment" doesn’t necessarily mean "do not have to pay tax at all".

kermchem

This seems to be a classic case of a politician not looking far enough over their (potentially limited) time horizon. If we assume the triple lock runs at 4% then from April 2031 the basic new state pension is going to be £15265. Meanwhile the personal allowance is frozen at £12570 until April 2031.

The weak and rushed plans for fixing this problem in April 2027 are going to be ancient history by 2031. Next general election no later than August 2029, but tax and pension policy will be a mess long before then. 

NoMore

Qyburn said:

NoMore said:

She did mention it in the budget speech 

“…at the same time we are ensuring that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through Simple Assessment from April 2027. “

But "do not have to pay small amounts of tax through Simple Assessment" doesn’t necessarily mean "do not have to pay tax at all".

Thanks for selectively quoting me and missing the part where I say although that's not very clear