state pension - first part year

1knuckles1

I'm getting very confused helping someone with their Self Assessment tax return and the state pension.

Firstly, although everything seems to say the pension increased 6.4.26, it actually seems to increase the next full week, not mid week. In other words, if a pension is paid Thursday - Wednesday, the uplift is effective from Thursday 9.4.26. Is this correct?

Guidance on how pension is taxed, dated 7.7.26 (https://www.gov.uk › guidance › how-your-state-pension-is-taxed) shows a full year is taxed as 1 week at the pre increase rate (rate 1), plus 51 weeks at the post increase rate (rate 2).

The example relating to a part year shows the taxable pension calculated using full week payments, despite an initial part week - but it is not clear which full weeks. Assuming 1 week of the post increase (rate 2) is taxable in 2026/27, the example shows the initial part week taxed as if a full week was paid. Is this correct?

This all looks very unfair!

Marcon

You are not alone - comes up rather regularly here! See

https://forums.moneysavingexpert.com/discussion/6652101/tax-on-state-pension-in-first-year-again

Qyburn

The example relating to a part year shows the taxable pension calculated using full week payments, despite an initial part week - but it is not clear which full weeks. Assuming 1 week of the post increase (rate 2) is taxable in 2026/27, the example shows the initial part week taxed as if a full week was paid. Is this correct?

When did this person's pension start, or rather when did the reach State Pension age? Just asking because for most people their first part year, ending at the end of the tax year, won't include that pre/post increase uncertainty.

For the initial part year,and just looking at my own figures it appears they tax on the number of whole weeks that you would have received if the SP had started with a full week - ie reach SP age on a Tuesday, first week's payment paid next Monday as a full week. So effectively tax you for a part week that you were entitled to, but didn't receive until next tax year.

1knuckles1

Apologies for my very late reply – down to tech issues and then a loss of momentum.

Many thanks for your replies!

Having followed links and threads I can see my part year example is similar to Polar Pig’s.

If the taxable pension is based on complete weeks to 5.4.26, I'm seeing X weeks, 6 days rounded up to X+1 weeks. The tax return prepopulated figure then rounds up a £, not down.

The HMRC examples are vague on dates. If the taxable pension is actually based on weeks paid (in this case Thursday - Wednesday), then I'm seeing X+1 weeks plus 2 days (to 8.4.26), taxed as X+1 weeks.

I’m thinking this might be the calculation to use, since the 2025/26 full year calculation uses weekly payments.

Given payments relate to Thursday - Wednesday and weeks are paid at either old or new rate (with no adjustment), the rate increased Thursday 9.4.26 (not the first Monday after 6/4). It looks to me as if HMRC are underpaying all April midweek payments.

The 2025/26 full year calculation uses 1 week old rate, 51 weeks new rate, which in this case would end 1.4.26. This means week ending 8.4.26, the last week paid at the old rate, is taxed in both 2025/26 and 2026/27. It looks to me as if HMRC are overtaxing part year payments.

With this knowledge I think we’ll be having a chat with HMRC. The difference of a week’s pension is not insignificant to a higher rate tax payer.

Really grateful for being pointed towards this extra information!

pinnks

I'm not sure I follow. We know that pre-populated amounts on tax returns are frequently inaccurate and need to be changed when completing the return. The legal requirement is simply the amount accruing in the tax year, what you would receive if paid weekly.

For your first year that is the 6 days for the first part week, plus the number of full weeks after that, which end before 6 April. And that's it.

For the second, and subsequent years, it's simply the number of weeks at the old rate that end in that tax year, plus the number of weeks at the new rate that end before 6 April. In general that will be 1 plus 51 but in some years it could be 53 weeks in total.

If you follow the law you will not be incorrectly taxed.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82106812#Comment_82106812

That is exactly how I deal with self assessing my state pension, although I don't suffer from HMRC pre populating what they believe the figure to be since I use third party external software to file my returns.

There is a certain satisfying sense of control in telling HMRC what my taxable income/gains are rather than allowing them to make their own assumptions from what may sometimes be faulty data.

pinnks

I don't think they are working from faulty date but are just doing it wrong. First they simply don't seem to have latched onto the fact that since 2016 the first and last week of the pension are apportioned to days and despite the SA guidance telling you to use 51 plus 1 weeks (ignoring the 53-week year issue completely), they don't follow their own guidance in their software. Staff on the SA helpline appeared clueless when I challenged them (may have changed now it has all hit the media) and just said do what you want.

I highlighted this issue to my MP long before this stuff hit the press recently and the response was that they are aware of the problem and a fix is in progress. It hadn't been fixed for the 2025/26 return, so here's hoping it will be fixed before the next one. Quite how they will unpick the issue for those who have been overtaxed because of their error is going to be interesting.

1knuckles1

"For your first year that is the 6 days for the first part week, plus the number of full weeks after that, which end before 6 April. And that's it."

That's really helpful - makes sense - thankyou!

SnowMan

I think it is all very unclear on what the precise taxation position is in relation to state pension (for those reaching SPA after 6th April 2010) both in the first part year and subsequent years.

It is clear that taxation is based on entitlement and not payments in the tax year. And in relation to full weeks entitlement that straddle a tax year the full weekly amount gets taxed in the new tax year. For example for someone paid on a Monday, the week 31st May 2026 to 6th April 2026 gets taxed in the 2026/2027 tax year as one day of this, Monday 6th April 2026 falls in the 2026/2027 tax year.

Past that the detail seems to be unclear and it seems to be custom and practice that determines what happens in practice. But this is my understanding of the taxation position; note I'm talking about the tax payable not how tax codes are set to recover that tax unless I state otherwise, albeit those tax codes can give some clues as to how it is eventually taxed. And I'm talking about someone in simple assessment not self assessment as the latter add their state pension amount into their return based on accepting or correcting pre filled amounts which themselves might be wrong (for example using 52 weeks at the new rate rather than 51 at the new and 1 at the old).

First part year

For the first (part) year the suggestion that it's the first part week, plus the number of full weeks after that, which end before 6 April that is taxed, is a reasonable interpretation of the legislation.

The example on the gov.uk website uses a whole number of weeks with no part week and actually rounds up to the next week. Clearly that example is incorrect but possibly reflects what they actually do in practice. The LITRG example for Christine has 3 weeks and a part day entitlement by my calculations (the SPA day is a Friday and the payment day is a Friday and so the first full entitlement week is Saturday to Friday with the Friday SPA is reached itself being the part week) so perhaps suggests it is complete weeks only. We would need to check the experience of someone whose state pension started during the year to see what happens in practice. But from the experience of others on this forum who do self assessment HMRC often do round up the part week to a full week. That is incorrect. Perhaps they routinely round the week up for simple assessment purposes also, and people don't notice as they are not proactively having to enter or correct a figure in the same way self assessors do.

Full year of payment of state pension in tax year

This is calculated as the number of weeks where the last day of the entitlement week falls within the tax year.

For example someone with the last 2 digits of their NI ending 80-99 is paid on a Friday and their entitlement weeks run from Saturday to Friday. 6th April 2026 is a Monday. So they will have 52 weeks ending within the tax year 2026/2027, the first week being the week 4th April to 10th April 2026, and the last week being 27th March 2027 to 2nd April 2027.

53 week years

Someone with the last 2 digits of their NI ending 00-19 is paid on a Monday and their entitlement weeks run from Tuesday to Monday. 6th April 2026 is a Monday. So they will have 53 weeks ending within the tax year 2026/2027, the first week being the week 31st March to 6th April 2026, and the last week being 30th March 2027 to 5th April 2027. So they will have 53 weeks of entitlement in the tax year.

My guess here is that HMRC (for someone in simple assessment) calculate the taxable pension as 52 weeks entitlement even though it is really 53. I realise this is a contentious statement that may be incorrect and some will say reasonably that tax law implies otherwise. But if this was not the case then note that in this example someone with just a full new state pension with a NI number with last 2 digits 00-19 would have state pension exceeding the standard personal allowance in 2026/2027 because of the 53 weeks. Note the initial tax code is set based on 52 weeks always according to the HMRC manual. Perhaps they later use 53 weeks in simple assessment and perhaps some uncollected tax becomes due when the simple assessment is done (?)

1 week at the old and 51 weeks at the new

It seems that 1 week always has to be at the old rate and 51 weeks at the new rate (leaving aside the 53 week issue)

For example someone with the last 2 digits of their NI ending 00-19 is paid on a Monday and their entitlement weeks run from Tuesday to Monday. Their first taxable week in 2026/2027 is the week 31st March to 6th April 2026. The state pension uprating kicks in from the first Monday of the tax year, 6th April 2026. So in this example the week 31st March to 6th April is therefore paid at the old rate and the week 7th April to 13th April and all subsequent weeks entitlement are paid at the new rate.

For those paid on a Tuesday the week 1st April 2026 to 7th April is at the old rate. For those paid on a Wednesday the week 2nd April 2026 to 8th April is at the old rate. For those paid on a Thursday the week 3rd April to 9th April is paid at the old rate. For those paid on a Friday the week 4th April to 10th April is paid at the old rate.

(edited and corrected following jem16's post)

(also edited to reflect other experiences from the thread linked at the beginning of this one).

jem16

https://forums.moneysavingexpert.com/discussion/comment/82111121#Comment_82111121

For those reaching SPA on or after 6th April 2010 and paid on a Monday, their entitlement week runs Tuesday to Monday, not Monday to Sunday. So for tax year 2026/27 that first payment on Monday 6th April was still at the old rate as their rise didn’t start until Tuesday 7th April.

Only those reaching SPA before that date would have 52 weeks of the new rate and not every year as it depends on when the first day of the new tax year starts.

SnowMan

https://forums.moneysavingexpert.com/discussion/comment/82111154#Comment_82111154

Thanks, that now makes more sense to me now. And explains why one week is always taxed at the old rate (for those reaching SPA after 6th April 2010). I've edited my post.