Not a full state pension plus a private pension

pinnks

Until the government of the day says, "Oops, perhaps not after all..."

kermchem

Perhaps the reality will dawn that a simpler way to run taxes would be to increase personal allowance and make the shortfall by increasing the basic rate of tax. 

Silvertabby

kermchem said:

Perhaps the reality will dawn that a simpler way to run taxes would be to increase personal allowance and make the shortfall by increasing the basic rate of tax. 

The Tory pre-election manifesto included the promise that the personal allowance for those past SPA would match the new single tier pension.  Even simpler.

But when Labour were asked if they would match that promise, they said "no".  

DRS1

Even simpler would be to stop increasing the state pension.

Personally I don't see that happening.

Dazed_and_C0nfused

pinnks said:

Dazed_and_C0nfused said:

pinnks said:

I fail to see what is unclear from those written words. 

If your only income is the basic old pension, or the new state pension, and it exceeds the personal allowance, then you will not be taxed on the excess. 

If you have any other income, like increments from deferral, additional pension from SERPS, Protected Payment under the new rules, or other pensions, earnings or whatever, then all bets are off and normal tax rules apply.

I think the fact that DWP deducting tax up front would meet what is set out in those words means it is still not 100% clear what the reality will be.

"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."

DWP does not deduct tax at source and nothing I have heard suggests they are about to change that.  They have been quite clear in an exchange I had with them that tax is not theirs and they won't get embroiled in it.  Never say never but...

DWP do already deduct tax at source from some State Pension related payments (the old deferral lump sums) so presumably it wouldn't be too much of a stretch for them to do it.

But given RR's subsequent conversation with ML I would agree it seems highly unlikely that this is where this will end up.

pinnks

They did/do withhold tax from those payments but my understanding is that it's not PAYE as such, which is presumably what would be needed to deduct tax generally from SP.  Personally I think that would be a good thing, as would be paying it monthly but can't see any government spending millions to make changes of that nature...  

Qyburn

pinnks said:

I fail to see what is unclear from those written words. 

If your only income is the basic old pension, or the new state pension, and it exceeds the personal allowance, then you will not be taxed on the excess. 

It's perfectly clear, but i think you misunderstand nevertheless. Your sentence should read ..

"If your only income is the basic old pension, or the new state pension, and it exceeds the personal allowance, then you will not be taxed on the excess via Simple Assessment, but you might be taxed by some other means." 

badmemory

The problem with the basic state pension is that it also comes with SERPS which I have absolutely no doubt will be taxable.

Silvertabby

badmemory said:

The problem with the basic state pension is that it also comes with SERPS which I have absolutely no doubt will be taxable.

Or a contracted out pension.  Only a very tiny number of 'old' pensioners will have the old basic State pension and nothing else.  

badmemory

Of the 5 over 70s I know only one has a DB pension.  One at 79 is still working.  One retired at 73 & only has the pension plus the sale of his almost bankrupt business several years before.  I have £2k per annum from my DC pension which I didn't take until 72 because of its pathetic value & an increased state pension because I felt it necessary to defer for 5 years so that I could afford to live.  Not that many had DB pensions.