Taxed on SP due to late husbands SP

Just_caring

I receive the new SP and approx £7 per week of my late husband pension and do not pay tax, I do have a draw down private pension but not taking it and haven’t used my full 25% tax allowance yet.

Today’s I’ve received a new tax code K35 which if I’m reading it correctly it says I’m due to pay tax on £362 in 26/27 which equates to my late husbands pension. And it will be added to my Private pension income ( but I’m not taking it)

I thought I’d read that if you only have income from SP you won’t pay tax even if you are above your personal allowance.

Can anyone advise please

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6656011/taxed-on-sp-due-to-late-husbands-sp

You do not just have the standard new State Pension though, you have an enhanced rate.

So the budget announcement is of no relevance to you.

If you haven't started taking the private pension I don't understand how HMRC are aware of it to allocate a tax code. But irrespective of that if you aren't taking income from it then the tax code itself is irrelevant for the moment.

MallyGirl

there are plenty of posts about this. Even when they work out exactly what they are going to do for those with just the state pension it won't be implemented for at least another year. Given that you get some of your late husband's pension you wouldn't fall into the category anyway.

As it stands you have to pay tax on your taxable income

DRS1

If they can't collect the tax through PAYE on your drawdown pension then presumably they will send you a tax bill at some point. You might want to store some of your state pension in a savings account (or ISA) so you have enough to pay that tax bill.

Just_caring

https://forums.moneysavingexpert.com/discussion/comment/81890605#Comment_81890605

I did take some of my PP as I was only 63 when husband passed and had no other income but haven’t taken any in this financial year.

So from other replies it sounds like because I get £7 pw of my late husbands SP I will get taxed, I know not a large amount but it’s the principle

QrizB

So from other replies it sounds like because I get £7 pw of my late husbands SP I will get taxed, I know not a large amount but it’s the principle.

The principle is that people with incomes in excess of the relevant allowances pay income tax on that excess.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81890619#Comment_81890619

And a very good principle it is too.

It fills the Chancellor's coffers and helps keep the country running

Ayr_Rage

The principal is correct and under RR's latest announcement you will not be included in the group that will have the SP exempt from tax.

You will get the standard personal allowance and any income above that will be liable for income tax.

Emmia

I see it that you're fortunate enough to have an income where you'll need to pay a very small amount of tax, which equates to ~£1 per day.

The population is generally getting older, so people on pensions also need to pay tax if that income is over the threshold, to fund services they and everyone else uses like the NHS, emergency services, road maintenance etc.

Baldytyke88

You can contribute to a Self Invested Personal Pension (SIPP), up to the age of 75, while receiving your state pension to reduce or eliminate the income tax owed on your total income.

Or just be happy that you will be contributing to the system by paying tax.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81890980#Comment_81890980

That would almost certainly make no difference whatsoever to the op's personal tax liability.