State Pension and Income Tax

isasmurf

But there's a 10% band - the first £1960 of income.

It's the first £2,020 for 04/05.

From memory i think it was an R86 or R89. In the end Norwich Union sent one out with the annuity application.

Aren't the forms R86/R89 to do with registering to receive your annuity without tax deducted?

hansi

Hi Hansi

As your wife has an extra pension form previous work, the Inland Revenue will apply her tax code to that.  But she'll still only pay a tidgy amount AFAIK.

I get full SRP plus SERPS, I also get 3 different annuities from previous employments.  Because B and I just sneaked into the married people's tax allowance age-group when we got married in January 2002 (he was born before April 1935) we got that, and we split the allowance between us.

Married women's independent taxation was one of those things I very much wanted to see, I lobbied for it for years.  It's humiliating to have a husband deal with one's tax affairs!

Margaret

Thanks Margaret. My wife calls me her "financial advisor" (LOL) ;D because I tend to look out for the best deals. Thanks for your help. She also gets 2 "lump sums" which are tax free ;D ;D ;D ;D so, "roll on January and what is more, she actually won't pay tax till the new tax year in April.

sarahlouise210

Some pension annuities are dealt with under schedule D tax and accordingly a tax code cannot be applied so the code would not be amended to collect the tax due on her state pension if this applies to margarets pension. If it is a schedule D annuity the original advice of completing a Self Assessment tax return would apply-as she will not become liable until 2004-5 the tax will not be payable until January 2006!! And based on the information you have provided it will not be much!

hansi

Thank you all very much

margaretclare

My wife calls me her "financial advisor" (LOL) ;D because I tend to look out for the best deals. Thanks for your help. She also gets 2 "lump sums" which are tax free ;D ;D ;D ;D so, "roll on January and what is more, she actually won't pay tax till the new tax year in April.

Best wishes, Hansi. 2 of my annuities are paid as annual 'lump sums' and they do get taxed; the one that's paid monthly from Prudential doesn't get taxed. My tax code is 241T.

It's useful having the annual lump sums, especially the one every September. I've always used this for something I could see, or a good holiday - last year it helped to pay for our trip to Canada and also a new fridge-freezer. This year it bought us a replacement washing-machine to match the fridge-freezer, and also our autumn project which was getting a garden pond made by a contractor. We could have had another week away for what the pond cost, but we thought it would give us more long-term enjoyment, and we're getting terrific fun and pleasure from it already, watching the birds splashing about.

Margaret

hansi

They are not "annual" lump sums. The one is a one off lump sum with a small yearly pension and the second is just a one off lump sum. Both letter say they are "tax free"

Robert_Sterling_3

Your wife will have submitted an R85 form to each Building Society in order to receive her interest gross. You will needd to write to each such society to tell them that she will not be eligible to receive interest gross in 2005-06 and thereafter.

margaretclare

They are not "annual" lump sums. The one is a one off lump sum with a small yearly pension and the second is just a one off lump sum. Both letter say they are "tax free"

Hi Hansi

Ah, I understand. She is allowed to take 25% as a tax-free lump sum, the remaining 75% has to be used to buy an annuity.

My 'annual' payments are taxable, obviously I had the tax-free 25% way back in 1989 and since then Guardian have been paying me £1640 a year taxed, that was my NHS pension which I transferred to Guardian.

Margaret