New Pension(er) Tax Allowance

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/82185810#Comment_82185810

They may have said that nobody on the State pension alone will pay tax, but what they actually meant was that nobody on the full rate single tier pension alone will pay tax.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82185865#Comment_82185865

…shock horror, politicians being economical with the truth. Who'd have thunk it…..

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82185955#Comment_82185955

except they seem to have gone further than they said they would. Even someone who is not actually receiving any state pension can get the benefit of this allowance as long as they are over SPA. It doesn't help me in the slightest but credit where credit is due.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82185963#Comment_82185963

Immaterial. They failed to be truthful and transparent. In this case it may be of benefit to some folk, but who knows next time. One could be generous and say it was a failure to communicate, but these people are supposed to be well versed in communication.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82185955#Comment_82185955

The actual wording in the 2025 budget speech was:

people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through Simple Assessment from April 2027

which was slightly amplified in the full published document:

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 budget document is always more comprehensively worded than the speech, as it simply isn't practical to read it verbatim, but that doesn't in itself mean that there's any attempt to mislead, despite cynicism about politicians and their motives!

And even though that original commitment only said that tax wouldn't need to be paid via simple assessment, as opposed to not being payable at all, this latter was verbally confirmed by Rachel Reeves to Martin Lewis on TV, after the budget.

And this year's budget has had to put flesh on those bones, which is even more complicated to summarise in bite-sized chunks, so when people are replaying what they believe they heard, it's usually worth a bit of fact-checking to get the full nuanced picture…

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82185979#Comment_82185979

It was reasonably straightforward in the budget speech to be clearer on what was actually meant. If politicians - or anyone else - fails to be clear, then the cynicism regarding politicians and their motives can only increase - even if there were no ulterior motives or deliberate intent to mislead.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82186004#Comment_82186004

But however much attention is paid to their wording, verbal summaries can never replace comprehensive documents, and in this case, as with many other budget points every year, it's about indicating a direction of travel when the detail hasn't been worked through, so ultimately it's all about what makes it into legislation anyway…

oldgeezersdiary

I'm fascinated to see where I'll end-up on this one. I have a state pension which currently gets taxed (although my bank account receives the full amount) and all the tax is taken from my tiny little private pension.

As I read it the same will continue to happen - so effectively I assume that the full amount of my pension increase will be taxed at 20%, and that will eat up more (or all) of my little private pension.

Is there any way I can calculate what will actually happen to my actual real income after next years April increase?

molerat

If your total income is in excess of £13319 you will not benefit from this allowance.

So total pay + Sp - 12570 = the amount subject to tax just as it has always been. Divide that amount by 12 and multiply by 0.2 gives the amount of tax each month. (roughly)

MK62

….your total taxable income…….just sayin…..