Widows state pension

sonyman18

I note with interest the Chancellors promise to Martin Lewis that pensioners whose only pension is the state pension will not have to pay tax on this pension for the duration of this parliament.

I have a friend who was recently widowed and is in receipt  of only a  state pension. However this pension is already just above the personal allowance as my friend has a small state pension top up which I understand to be due to her being eligible for some ongoing payments from her former husbands state pension since his death. She also has interest from modest savings but this is not taxable as it is less than £5k (even allowing for her income above the personal allowance) and thus qualifies for the starting rate for savers on low income. My friend has no other taxable income. 

My friend has been sent a payment demand for last tax year to cover tax owed due to this small top up. Should I advise her not to pay in the first instance and to query the demand with HMRC? 

molerat

The new rules will not apply until April 2027, until then it is business as usual and tax is due as it always has been.

sonyman18

Good point molerat thank you - But the freeze of personal allowance applies now and has merely been extended to 2031 and many of the chancellors changes eg freezing of rail fares have immediate effect. In the interview the chancellor merely said the changeover to tax liability 'looked like' it would generally  be 2027 but she was clear that tax would not be applied for the duration of the parliament. (not saying you are wrong, you make a good point - just testing - also it would be good to know if the promise applies including widows allowances even if that is only from 2027)

marlot

It's not clear exactly what the chancellor is proposing.  I can think of several ways to achieve her aims, and I'm sure there are civil servants in HMRC and DWP trying hard to give her options.

I think she was unwise to say there would be no tax payable - it has set a load of hares running.

badmemory

If the triple lock doesn't go up to over 10% again.  If you don't have any other pension at all.  If you don't have any of the old style add ons.  I suspect a very badly written or mis-quoted speech.

sheramber

Anybody in receipt of only the  new state pension does not pay tax  at present, as it is less  the personal allowance.

As your friend already pays tax that indicates she is in receipt of more than the basic new state pension.

She is in receipt of her own state pension plus inherited pension from her deceased pension. 

There is no widows pension now. 

She is in receipt of two amounts paid as one amount. 

So, I don’t think she will come under the proposed plan. 

MallyGirl

Her interest may be below £5k but it might still count as income (since it is liable for income tax) when they thrash out the details - we'll have to wait and see exactly what is included and what isn't 

Dazed_and_C0nfused

sonyman18 said:

I note with interest the Chancellors promise to Martin Lewis that pensioners whose only pension is the state pension will not have to pay tax friend as Satte Pension isn't her sole on this pension for the duration of this parliament.

I have a friend who was recently widowed and is in receipt  of only a  state pension. However this pension is already just above the personal allowance as my friend has a small state pension top up which I understand to be due to her being eligible for some ongoing payments from her former husbands state pension since his death. She also has interest from modest savings but this is not taxable as it is less than £5k (even allowing for her income above the personal allowance) and thus qualifies for the starting rate for savers on low income. My friend has no other taxable income. 

My friend has been sent a payment demand for last tax year to cover tax owed due to this small top up. Should I advise her not to pay in the first instance and to query the demand with HMRC? 

There is no £5,000 threshold which means it isn't "taxable".

Based on the information currently available this announcement wouldn't apply to your friend as her State Pension isn't her sole source of (taxable) income.