Tax On Pensions

[Thisoldbird]

Last April after the rise in State Pension it was apparent I had slipped into the tax payer bracket. 

A few weeks after the raise I rang the Pension Service to ask when or how was this tax taken.. the very pleasant lady replied it would be taken at source...as my only income is from my lower rate state Pension and my late husband's SERPs . I asked again how would this be paid..again it would be paid at source so knowing no better I assumed the Pension Servive had it in hand. 

 

Yesterday I received a tax bill for 2023-4..a whole years payment when I had understood it was taken at source... no I wasn't! 

Nor is it being taken for the currant tax year.  

Why give pensioners a rise and taking back by another method. 

Bewildered by it all!!

[newmodarmy]

If that's what they said I don't see why they would have given that answer - state pensions are never taxed at source and they should have known that. But it doesn't change the fact that the tax is due, I'm afraid.  The amount can't be huge and hopefully they'll have given you time to pay it- maybe 31st December.

We had a similar request once and forgot to repay it in December and they simply sent a polite reminder about 6 months later so we paid up then.

[THECORBYLOON]

The State Pension isn't taxed at source and as for increasing the pension and then taking it back, you are paying 20% tax only on the amount over your personal allowance so you'll have more still than the previous year, even after tax.

They can't ask you to pay for this tax year, 2024/25 because they won't know how much tax you owe until the tax year ends on April 5th.

[dasherman]

Income tax is payable on pensions in the same way as it is on wages. Basically any income over £12,570 is taxable, unless you have a different tax code.

[Thisoldbird]

Of course I expected to pay,  the very reason I rang them in the first place was to make sure i was doing the right thing..

 

My anger is being told the wrong facts..the very department that should surely give correct information.  That's all!! 

[douglas9401]

I seem to recall a campaign, 'Tax Doesn't Have To Be Taxing'.

 

More government deflection and misinformation it appears.

[newmodarmy]

It's better to raise tax questions with HMRC rather than the employer.

Or just look at your tax code on your  pension to see ifits what you exoected.

[THECORBYLOON]

This is about the State Pension, not a company pension so there is no employer involved.

[newmodarmy]

Okay  but does it matter ...I was talking generally. 

[Thisoldbird]

Correct Corbyloon 

[newmodarmy]

The same point applies. Ask whoever pays you -  dwp here- what the code is they are using;  ask Hmrc what your code should be.

No excuse for Dwp getting this wrong though.

[THECORBYLOON]

There is no tax code used by DWP because it's not taxed at source and The Pension Service (PS) should know that.

The tax year runs from April 6th to April 5th and the PS should also know HMRC will contact pensioners a few month after the 5th April if there's any tax to be paid for the previous tax year.