Tax on state pension

brenev

The issue here is that Rachel Reeves statement only relates to the basic state pension. That means that anybody with the old state pension, consisting of the basic element and the second tier element does not get the no-tax guarantee. My question to Martin and the team is - where you aware of this and the impact on the many pensioners who only receive the old state pension? The impact is not just that they may receive a tax bill because of the recent and future increases but that benefits are also affected. Surely not fair and I hope you can raise this.

michaels

To say nothing of those like my DW who will earn a private pension that is less than the resulting tax on her state pension because of having the private pension.

Qyburn

michaels said:

To say nothing of those like my DW who will earn a private pension that is less than the resulting tax on her state pension because of having the private pension.

Thanks an unfortunate example. What are the rough figures out of interest? We don't yet know what the SP will be in 2027/28 but if you assume the minimum 2.5% uplift then tax would be something like £59 for that year.

Qyburn

brenev said:

The issue here is that Rachel Reeves statement only relates to the basic state pension. That means that anybody with the old state pension, consisting of the basic element and the second tier element does not get the no-tax guarantee. 

She only promised that they won't pay tax via Simple Assessment not that they wouldn't pay tax at all.

Aside from that we don't have any details, so we don't actually know if it will or won't apply to someone on Basic State Pension with SERPS (etc) but still below NSP. 

Grumpy_chap

Qyburn said:

brenev said:

The issue here is that Rachel Reeves statement only relates to the basic state pension. That means that anybody with the old state pension, consisting of the basic element and the second tier element does not get the no-tax guarantee. 

She only promised that they won't pay tax via Simple Assessment not that they wouldn't pay tax at all.

Aside from that we don't have any details, so we don't actually know if it will or won't apply to someone on Basic State Pension with SERPS (etc) but still below NSP. 

Yes, that is what was announced in the Budget.

Then, in interviews too try to clarify the situation, she certainly appears (has been reported) to have said that SP income only (no increments) would not pay tax this Parliament.

Hopefully, there will be no further comment - official or not - from Government and the Chancellor until such time as the full rules and application are fully thought out.

af1963

brenev said:

The issue here is that Rachel Reeves statement only relates to the basic state pension. That means that anybody with the old state pension, consisting of the basic element and the second tier element does not get the no-tax guarantee. My question to Martin and the team is - where you aware of this and the impact on the many pensioners who only receive the old state pension? The impact is not just that they may receive a tax bill because of the recent and future increases but that benefits are also affected. Surely not fair and I hope you can raise this.

Your SSP/SERPS extra pension is being treated the same as the private pensions that others bought with their opted-out contributions. What's unfair about that ?