State pension but i pay tax

kermchem

Those people, like my late father, who paid extra NI into SERPS or some other additional state pension, paid that NI out of their salary, and then they paid income tax on what was left. They did not pay tax on what went into additional state pension. It is not unfair to pay tax when you receive that pension and are over the personal allowance. It is no different from those who paid into a company pension, received tax relief on the way in and then pay tax on the pension on the way out.

To me the bigger problem coming is that Rachel Reeves for whatever reason cannot see very far into the future. She has just frozen the personal allowance at £12570 until April 2031. The new state pension is going to be £12547 from April 2026, and so she has come up with some ideas to prevent the pensioner with a tiny amount of other income paying tax. BUT, assume a triple lock of 4%, and the new state pension will be £13049 in April 2027, and £14678 by April 2031. Avoiding taxing those who receive the basic state pension and no other income is going to need a bigger sticking plaster.

Grumpy_chap

Seaquester said:

SVaz said:

So someone getting £25000 from an old State pension + serps shouldn’t have to pay any tax then?
Yes,  that would go down well with those workers on minimum wage who pay tax on £12k+ of their wages.
Actually,  being a military veteran and serving my country for 12 years perhaps I shouldn’t have to pay tax on my forces pension OR my State pension?    We can all come up with ‘reasons’ why we shouldn’t pay tax 😉
I’d rather have a functioning country thanks.
Come to think of it,  pensioners should pay NI too, after all they are the biggest users of the NHS. 

Who gets £25000 state pension??????.pensioners to pay NIC too ??????dont you think we have contributed enough ,i think  your comments will be treated with the contempt they deserve by the overwhelming majority of pensioners.
However you are entitled to your view.

Well, if you consider NI from a detached and factual assessment rather than what will impact you or any individual, we have to consider that a lot has changed since the the modern NI was introduced in 1948.

NI is stated to be the way to pay for welfare benefits ("unemployment insurance" originally but now expanded), NHS, state pension.

There is (was) a logic to no NI being paid by those over SP age as they are no longer receiving "unemployment insurance" and nor does one ordinarily contribute to a pension once drawing a pension.  That left only the NHS, for which the life-expectancy at SP age and available healthcare treatments were limited.

In the many years since, life expectancy and the healthcare costs have increased rather significantly with many new treatments now offered - mainly to the more senior members of society - that were not available at the inception of the modern NI.  For example, cataract operations seem very common among individuals of a certain age.

It might make some sense that those above SP age now receiving far more healthcare than originally envisaged might still, logically, pay NI towards those costs.
If there was no NHS, individuals would need to pay healthcare insurance until they cease to need healthcare and the premiums would get progressively more expensive with age.  

xylophone

Who gets £25000 state pension

It could be possible for someone who had deferred his SP.

A person with maximum Basic and maximum ASP could be on over £20,000 SP.

xylophone

To me the bigger problem coming is that Rachel Reeves for whatever reason cannot see very far into the future.

See article referenced here

https://forums.moneysavingexpert.com/discussion/comment/81766552/#Comment_81766552

Of course it might not be her problem by then....

artyboy

xylophone said:

Who gets £25000 state pension

It could be possible for someone who had deferred his SP.

A person with maximum Basic and maximum ASP could be on over £20,000 SP.

Which is why I mentioned in another thread that if this was true (which I doubt), then it would make sense for anyone with a DC pot to fully draw that down and defer their SP for as long as possible.

zagfles

kermchem said:

Those people, like my late father, who paid extra NI into SERPS or some other additional state pension, paid that NI out of their salary, and then they paid income tax on what was left. They did not pay tax on what went into additional state pension. It is not unfair to pay tax when you receive that pension and are over the personal allowance. It is no different from those who paid into a company pension, received tax relief on the way in and then pay tax on the pension on the way out.

NI is not, and I doubt ever has been, tax deductible. You pay income tax on your income before NI is deducted, so you get no tax relief on NI contributions. So there is an argument that the state pension should be tax exempt. Although the counter argument is that employer NI conts are not taxable, and they'll be the bulk of overall NI these days.