What is the definition of income when assessing tax on pension

StevieD54

Dazed_and_C0nfused said:

StevieD54 said:

Have just read this:
https://www.moneysavingexpert.com/news/2025/11/martin-lewis-chancellor-state-pension-income-tax/
Apologies if this question has been covered already, but Reeves said the SP is NOT going to be taxed, so does that mean those of us who do currently pay income tax (because we have extra income from a personal pension), will have the SP element deducted for total income assessment? 

You have completely misunderstood what has been proposed.

As it stands if you have any other taxable income the new idea simply doesn't apply to you and nothing is expected to change.

What have I misunderstood? I receive both SP and PP payments, so my question is: if people whose SP goes beyond the personal allowance are not going to be taxed on it, will the part of my SP that exceeds the personal allowance also be exempt from income tax? Because atm, the SP contributes to my total income, and that is taxed, obviously. Do you get my drift?

Smudgeismydog

As you receive PP payments, my understanding is that this doesn’t apply to you.

Only those people who only receive a basic state pension won’t be taxed from 2027.

QrizB

StevieD54 said:

What have I misunderstood?

The budget announcement.

StevieD54 said:

... so my question is: if people whose SP goes beyond the personal allowance are not going to be taxed on it, will the part of my SP that exceeds the personal allowance also be exempt from income tax?

No.

zagfles

StevieD54 said:

Dazed_and_C0nfused said:

StevieD54 said:

Have just read this:
https://www.moneysavingexpert.com/news/2025/11/martin-lewis-chancellor-state-pension-income-tax/
Apologies if this question has been covered already, but Reeves said the SP is NOT going to be taxed, so does that mean those of us who do currently pay income tax (because we have extra income from a personal pension), will have the SP element deducted for total income assessment? 

You have completely misunderstood what has been proposed.

As it stands if you have any other taxable income the new idea simply doesn't apply to you and nothing is expected to change.

What have I misunderstood? I receive both SP and PP payments, so my question is: if people whose SP goes beyond the personal allowance are not going to be taxed on it, will the part of my SP that exceeds the personal allowance also be exempt from income tax? Because atm, the SP contributes to my total income, and that is taxed, obviously. Do you get my drift?

It depends how it's implemented. The implication of the budget statement is that someone on a state pension only pays no tax, but someone on exactly the same income made up of a lower state pension plus a small occupational pension does pay tax would make a ridiculously unfair anomaly, which would cause the govt political problems.

So as I said earlier, I reckon they'll reintroduce a pensioner's tax allowance set at the level of the new state pension, which would mean you'd only pay tax on the private pension. But that's just my speculation, you'll have to wait for the definitive answer. 

Dazed_and_C0nfused

StevieD54 said:

Dazed_and_C0nfused said:

StevieD54 said:

Have just read this:
https://www.moneysavingexpert.com/news/2025/11/martin-lewis-chancellor-state-pension-income-tax/
Apologies if this question has been covered already, but Reeves said the SP is NOT going to be taxed, so does that mean those of us who do currently pay income tax (because we have extra income from a personal pension), will have the SP element deducted for total income assessment? 

You have completely misunderstood what has been proposed.

As it stands if you have any other taxable income the new idea simply doesn't apply to you and nothing is expected to change.

What have I misunderstood? I receive both SP and PP payments, so my question is: if people whose SP goes beyond the personal allowance are not going to be taxed on it, will the part of my SP that exceeds the personal allowance also be exempt from income tax? Because atm, the SP contributes to my total income, and that is taxed, obviously. Do you get my drift?

Rachel Reeves answered this in her interview with Martin Lewis.  There will not be any change for someone with State Pension and other pension income.

maman

My understanding is that if a person is solely on state pension thy will be taxed if it is above the threshold. What I understand from the Chancellor's interview is that it will be by a simple method with no need to complete a self assessment form. 

Dazed_and_C0nfused

maman said:

My understanding is that if a person is solely on state pension thy will be taxed if it is above the threshold. What I understand from the Chancellor's interview is that it will be by a simple method with no need to complete a self assessment form. 

There is no need to compete a tax return now in that situation so that definitely isn't what is going to happen.

maman

Dazed_and_C0nfused said:

maman said:

My understanding is that if a person is solely on state pension thy will be taxed if it is above the threshold. What I understand from the Chancellor's interview is that it will be by a simple method with no need to complete a self assessment form. 

There is no need to compete a tax return now in that situation so that definitely isn't what is going to happen.

Perhaps I should have emphasised my point that anyone that is about to go beyond the tax threshold will be paying tax and it will be a simple system. That system is new to them.