State Pension and tax Threshhold

sim50

Wife only has a Full state pension. I work and had some of my wifes threshold added to my tax allowance. She has just had a tax bill for £130.60 which I've paid. I've paid this as she has a lower allowance because of the afore mentioned transfer.

With the upcoming increase of State Pension, on the MLShow 15/09/26 it was stated that anyone who only gets state pension will not be taxed on it if that is their only income (Rachel Reeves clip).

does this not count if your partner is earning?

Woodstok2000

https://forums.moneysavingexpert.com/discussion/6683463/state-pension-and-tax-threshhold

They haven't announced the details, but I cant imagine they will allow people to potentially game the system that way. Youve reduced your tax bill, but that also reduces your wife's allowance. If youd paid your full tax bill, your wife would not have paid any tax - as a couple you have not lost out overall.

p00hsticks

I would imagine that that statement is based on the assumption that the pensioner would have their full tax allowance available to them, not that they've voluntarily given away some of it to their spouse.

peteuk

Income tax is an individual responsibility. Full UK state pension is currently £12,547.60, with basic tax starting at £12,571. So normally she would not be paying income tax unless she has another income.

You taking some of her tax allowance will reduce her tax free personal allowance. Means she has earnt £653.00 over the threshold (Paid at 20%).

Your income will not affect her income tax payments, as it didn't when she was pre pensionable age.

sim50

https://forums.moneysavingexpert.com/discussion/comment/82137894#Comment_82137894

Thanks. That is my thinking and therefore shouldn't be taken into account when it comes to the stance made by R Reeves during the aforementioned interview and the current Gov Statement on tonight's show. I suspect that come pension increase I will be transferring the allowance back as there will be no further benefit in leaving it on my code.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/82137919#Comment_82137919

Thats almost certainly correct. There's only ever really a benefit transferring allowance when one of you earns below the threshold.

How much did you save doing it this way last year....it looks from the above like you transferred about £670 allowance to yourself, saving you £134 but costing your wife £130?

friolento

It is totally false that nobody will pay tax on on their state pensions.

Some people have been paying tax on their state pensions for years because their basic SP plus their Additional SP was more than the Personal Allowance. From memory, the current maximum of SP is a bit over £20k, so well over the Personal Allowance.

The only new thing is that there will be, from next tax year, more pensioners than before paying tax is that the maximum new state pension is above the Personal Allowance. But not everyone gets that maximum new state pension. Some get more, some get less. One of the great misconceptions is that all pensioners get the same amount of state pensions. They don't. They never have. And may be never will. Existing pensioners will know that. If you aren't a pensioner yet, you need to get your personal state pension forecast to know what you might get.

Even if Government will somehow exempt people from paying tax on the maximum new state pension, there will still be people who get more than the maximum new state pension (because they get Additional State Pension), and they will continue to pay tax on it.

MSE should be doing better, and explain why people get all sorts of different amounts of state pensions.

friolento

https://forums.moneysavingexpert.com/discussion/comment/82137894#Comment_82137894

She could be getting Additional State Pension. There's no such thing as "Full state pension". From the information provided by the OP, it's not really possible to work out what income tax would be due. We'd need to see the actual figures of all of her income, including any interest on savings accounts etc.

Woodstok2000

There's no such thing as "Full state pension"

The full rate of new State Pension is £241.30 a week.

https://www.gov.uk/new-state-pension/what-youll-get

sheramber

https://forums.moneysavingexpert.com/discussion/comment/82137894#Comment_82137894

https://forums.moneysavingexpert.com/discussion/comment/82137936#Comment_82137936

The official statement is ‘ that pensioners whose sole income is the basic or new state pension would not have to pay small amounts of tax via simple assessment from 2027/28 ‘.

€urofile

Thanks. That is my thinking and therefore shouldn't be taken into account when it comes to the stance made by R Reeves during the aforementioned interview and the current Gov Statement on tonight's show. I suspect that come pension increase I will be transferring the allowance back as there will be no further benefit in leaving it on my code.

This needs to be done BEFORE the next tax year starts on 5 April 2027