Tax Misery for State Pensioners

Mikeyorks

bigheadxx wrote: »

A) If You Only Have A State Pension Ie No Other Pension Then The Only Way To Pay Income Tax On Your State Pension Is Via Self Assessment As It Cannot Be Deducted At Source.

Not Really What Self Assessment Is Intended For.

A) ..... as discussed earlier in the thread, that is true

..... but that isn't. SA was designed as a 'spectrum' system. It covers people owing £millions in CGT at the top end of the system and down to people owing just a few pounds from mystery shopping and State Pension (which exceeds pa and no other taxable income) ... at the bottom end of the spectrum.

I agree that it can, instinctively, sound like the proverbial sledgehammer. But, in reality, it's no more complex than people having pensions from at least two separate sources and attempting to reconcile the fact that the tax on one (State) ... is actually deducted from the other (Occupational).

My Mother has a State Pension .... an occupational pension in her own right and an inherited occupational pension following the death of my Father. So there are 2 separate PAYE Code numbers at play ..... and the entity adds up to a complexity that would actually be easier under SA.

margaretclare

Yes, Mike, I have 3 separate tiddly little annuities, each with its own tax office. However, it's not so complex because they all 'talk' to each other, and one is the 'main' one, if you like, which keeps the others informed.

Nomad25

To answer your question Ed, yes it is grossly unfair to slam 60 - 65 y/o pensioners and yes it does seem to be ladies in general. What else can be expected of these [mainly male] mean spirited weasels, who purport to have the nation's interests at heart.

Mary_Hartnell

My mother worked into her 70's and as a result got into the pensioner poverty trap; where the extra personal allowance gets clawed back (it makes all these people winging about a 40% tax rate look relatively lucky).

Eventually the tax man twigged that there might be an issue, so he sent her a return.

She stormed off to the tax office and delivered a rant along the lines of "I'm an old woman of 72, I cannot understand this thing".

The tax man let her off - I cannot see that happening these days.

Fortunately she finally decided to retire a year or so later, just in time for the 10% band to be introduced. I had to do a tax return for her every year after that just to get back about 150 pounds or so.

Life is MORE complex as a pensioner.

jem16

Jennifer_Jane wrote: »

Re the tax position, I'm now 61 and cannot afford to retire, but when I do, I won't receive the full state pension and will only get a small Company pension. So from the above, it indicates that I need to do a self-assessment tax form until I get old enough to get above the allowance?

As you will have a tax code for the company pension, this code will be adjusted to take into account your state pension so that you will pay the correct tax.

You probably won't need to do a tax return.

EdInvestor

One thing seems odd to me.Why does pension credit kick in at 60 when the official retirement age is 65 for men (and will be 65 for women in due course)?

Shouldn't a man aged between 60 and 65 be working if he cannot afford to retire because he has other means (such as pensions which start earlier, or savings)?

If he cannot work, shouldn't he be on job seeker's allowance of some such benefit?

For instance in terryw's case, I assume his situation will be completely different when he gets to age 65 and claims his and his wife's state pensions, ie there will be quite a big gap then between his position and that of his neighbour on pension credit who's basic position will remain the same?


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Nomad25

Ed: oh right I didn't understand what you were getting at for a mo. Would this have something to do with bygone times, where a bloke could take early retirement [was a civil service option]? Know nowt about JSA qualifying issues.

seven-day-weekend

My husband is already early retired (he is now 59 and gets his Teachers' pension). He will get his State Pension in 2014.

I am not working but reach official retirement age in January 2010. I will then get my full State Pension (plus a bit) which according to the Pension Forecast People will be £94.33 pw (based on 2008 rate).

This is considerably less than anyone would get on Pension Credit. However I am married - I suppose if I was single it would be made up to Pension Credit level (£120).

When I am nearly 65 I can claim my Local Governmemt Pension without any reductions. This will entitle me to (on today's rates) another £45 a week.
So my total would be more than Pension Credit and of course there will be my husband's pensions for us both to live on.

He will have to pay tax (he does already on his TP) - I don't think I will.

Although my pensions will not be a lot more than Pension Credit I am still glad I have them in my own right and like Margaret would make the same decision again in this matter. However I can understand why people get angry when they only have a small pension (like myself) that they have paid into, but because of it they are not eligible for things like Council Tax Benefit, whereas someone who has never paid anything and has almost the same money made up by Pension Credit, is.

Don't know what the answer is though.

EdInvestor

I see that even the pension credit discriminates against women. :mad:

Pension credit
People with savings over £6,000 and anyone over 65 with an income above the minimum income guarantee will get more help from April 2003 when the new Pension Credit begins. The credit will top up the incomes of people who are just above the level to get the minimum income guarantee. At the moment as soon as your income goes above the minimum income guarantee then you get nothing from the state. In future, if you have a small private pension or savings over £6000 you will get up to £14 on top of your income to reward you for saving. However, the Government has made two big changes to the plans it announced in a year ago (they were set out in detail in Saga Magazine January 2001).
· First, the new system will only apply in full to people who are aged 65 or more – women pensioners aged 60-64 will be excluded. They will be able to get the minimum income guarantee – but they will not get the extra money if their income is just above the minimum income guarantee level. European law forbids discrimination between men and women. So the Government has to pay the new credit at the same age to men and women. Men get their retirement pension at 65 while women still get it at 60 (a special exemption to age discrimination rules allows that difference to continue until 2020). To conform with the law, the Government has chosen to deny the new credit to women aged 60-64. The alternative would be to pay it to men at 60, but that would be much more expensive, and complicated. The Government claims it could not be done.

url=http://www.web40571.clarahost.co.uk/archive/saga/020201.htm


So I make that 3 ways the system discrimiates against women 60-64 now:

1.They get lower pension credit
2.They don't benefit from the the new NI rules post 2010
3.They don't get age tax allowance even though they are officially retired.

And this is because to introduce fairness would break European rules on err, fairness.

Anybody else got any more examples?

There's another one involving being in receip of the state pension but not being able to claim for an adult dependant as a man can, as well.

Jennifer_Jane

jem16 wrote: »

As you will have a tax code for the company pension, this code will be adjusted to take into account your state pension so that you will pay the correct tax.

You probably won't need to do a tax return.

Thanks, Jem16, but how much state pension will they assume I'm on - or won't that matter?

At the moment I have about 15 years payments but am deferring Basic State Pension till I stop work to boost up the income.

Thanks for your help.
Jen
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