Budget 2025

11C

In Martin’s discussion with the Chancellor after the Budget she said that if source of income was only the state pension and this took it over the personal allowance there would be no tax to pay. What if the winter fuel allowance is the culprit here, is this additional income and so tax is payable?

JoeCrystal

*sighs* These kind of posts is going to be coming for a while!

Dazed_and_C0nfused

11C said:

In Martin’s discussion with the Chancellor after the Budget she said that if source of income was only the state pension and this took it over the personal allowance there would be no tax to pay. What if the winter fuel allowance is the culprit here, is this additional income and so tax is payable?

Winter Fuel Payment isn't taxable income so I cannot see why it would be considered "income" in this situation.

If it was it would effectively make the whole thing a farce as everyone with State Pension and no other income would be getting the Winter Fuel Payment.

Silvertabby

Once a false rumour has taken legs, it's very difficult to stop !

artyboy

Silvertabby said:

Once a false rumour has taken legs, it's very difficult to stop !

"A lie can travel around the world before the truth has got its boots on"

(Pratchett/Twain/Swift/anon?)

ali_bear

What about bank interest? Suppose you received the SP plus 3.60 from your current account provider. 

Dazed_and_C0nfused

ali_bear said:

What about bank interest? Suppose you received the SP plus 3.60 from your current account provider. 

Then based on the budget announcement you wouldn't benefit from this as State Pension isn't your sole income.

Aretnap

Dazed_and_C0nfused said:

ali_bear said:

What about bank interest? Suppose you received the SP plus 3.60 from your current account provider. 

Then based on the budget announcement you wouldn't benefit from this as State Pension isn't your sole income.

Or maybe it will be discounted if under the personal savings allowance and/or starter savings allowance, so only people getting large amounts of interest would need to worry.

On the face of it though there is certainly the potential for cliff edge effects where a very small amount of taxable income could leave you worse off. The people who work on policy at the Treasury are not completely stupid however, and will doubtless be aware of that and will be considering more detailed plans which will mitigate at least some of those cliff edges. We will have to wait and see what the fine detail looks like in due course.

Grumpy_chap

Aretnap said:

Dazed_and_C0nfused said:

ali_bear said:

What about bank interest? Suppose you received the SP plus 3.60 from your current account provider. 

Then based on the budget announcement you wouldn't benefit from this as State Pension isn't your sole income.

Or maybe it will be discounted if under the personal savings allowance and/or starter savings allowance, so only people getting large amounts of interest would need to worry.

On the face of it though there is certainly the potential for cliff edge effects where a very small amount of taxable income could leave you worse off. The people who work on policy at the Treasury are not completely stupid however, and will doubtless be aware of that and will be considering more detailed plans which will mitigate at least some of those cliff edges. We will have to wait and see what the fine detail looks like in due course.

Aaah, yes, our tax and benefits system is wholly bereft of cliff edges...

dunstonh

This whole thing smacks of opening one's mouth before the brain has been engaged.  There is so much wrong with this proposal, and hopefully, sufficient MPs will kill it off.

Alexland

dunstonh said:

This whole thing smacks of opening one's mouth before the brain has been engaged.  There is so much wrong with this proposal, and hopefully, sufficient MPs will kill it off.

I think she genuinely made an error in what she was saying in conversation with Martin. The treasury were clear that they want to reduce the admin not write off the tax due. My guess is that they will just come up with something like paying the SP with the tax already deducted.

I think she might have realised the error when Martin summed it up but then decided not to correct him as she desperately needed some popularity, it wouldn't cost much if she had to do it, and it's hardly a big mistake compared to the rest of the budget mistakes.

I'm wondering if she will still be in the job next week or how much of this budget will happen.

https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html

"State Pension and Simple Assessment – The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year."