Reduction in Pension

[Hugh Spencer]

A friend of mine has just had an increase in her state and private pension which has made her pay income tax for the first time. Now she receives less per month than she did before. Can this be right?

[berniecuddles]

lol with this goverment YES!!

[woofgang]

with any government yes. Its one of the problems with hitting the initial tax band

[dzug2]

No it isn't right.

She will be getting an increased state pension regardless - no tax is being deducted from it so it can't be less.

The tax due on her state pension is being deducted from her private pension so the net amount from that could conceivably be less.

It is possible that too much tax is being deducted for her state pension - that can be reclaimed at the end of the tax year if it is so - and it should be possible to adjust her tax code to a more realistic estimate.

[starone]

I pay £72 a month income tax - very reluctantly. This is on my state pension and my industrial pension.

[dasherman]

If your friends income from earnings and/or pension excedes the personal tax allowance for her age then she will have to pay tax. Currently the rates are:

Under 65's = £7,475
65-74 = £9,940
75+ = £10,090

[factor-fiction]

It wouldn't usually be right but it could be right if she only received pension for part of the last tax year and didn't earn enough in the last tax year to pay tax.

[Old_Geezer]

Any system needs to draw lines somewhere.
Sounds a pain though. Maybe she should see a financial adviser to see if she can avoid tax. Maybe some sort of pension sacrifice scheme ?