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State Pension taxable
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When has it ever not been taxable 🤔
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Perhaps those who have been rewarded with extra relief for 'lumpy' salary sacrifice will now be rewarded in retirement by tax-efficient 'lumpy' pension withdrawals of those funds - draw down to higher rate threshold one year, then no withdrawal the next year to avoid tax.
We do love to have odd incentive structures around pensions.
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Agreed that SP has always been taxable, but the OP may be assuming no tax because the personal allowance was historically significantly higher than the SP and thus there was perhaps little danger of the SP being taxed.
As above, it's a nonsense to talk about the state pension being taxed or not taxed in any event, especially where someone has more than one source of income. Income tax applies to your total taxable income, not to any particular part of it. If your state pension is £12,000 and you have a private pension of £8,000 then your taxable income is £20,000, of which £12,570 is taxed at 0% and the remainder is taxed at 20%. Depending on which order you think of your income as arriving in, you might equally validly think of that as no tax on your state pension and £1,486 of tax on your private pension, or no tax on your private pension and £1,486 on your state pension. Both would be wrong though - the tax is levied on your income as a whole.
In the OP's case, unless her private pension is trivially small, she will already have been paying tax on her state pension (or more accurately, on her total income, including her state pension) for a good number of years, and quite possibly since she retired. The only thing which has changed is that she's now aware of this fact, that she obviously wasn't aware of before.
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I agree. But the post I quoted stated that £12570 WOULD NO T BE TAXED, which I was correcting.
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Still not following - what do you feel is untrue about the statement that the first £12,570 of income isn't taxed? Are you making the pedantic point that it's technically still taxable income but that no tax is actually payable, or referring to the small number of people with a different personal allowance, or something else perhaps?
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My poor terminology - perhaps more folk paying tax would be more accurate.
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More folk getting a bigger state pension every year.
So much so, that it’s caught up with the basic rate threshold.
Wonderful! 😀
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No it is not wonderful. The SP has arguably simply kept up with inflation yet the basic rate has not risen accordingly. This effectively means more people will be paying more tax than before - where there was an appreciable gap between SP and basic rate. Arguably further increases in the SP may be offset by the increase in tax one has to pay.
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Simply kept up with inflation?
Since 2001, State Pension is 33.5% higher than it would have been with a simple CPI link. Since 2010, it is 18.2% higher than it would have been with a simple CPI link.
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When I started work in 1971 the State pension was £6 per week. According to the BoE inflation calculator (which uses average annual inflation figures) that would now be £76 per week.
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