Taxing Basic State Pension

[Maydup]

I wonder how many people will cope with having to pay tax on their basic state pension from April? It seems like a huge and costly admin task to collect it.

Or do we think the tax thresholds will be put up to save the hassle?

[bednobs]

Hasn't it always been taxable?

[ubasses]

Only if you have other income taking you over the threshold.  I don't think that this years increase will do that, pension at higher rate is £11500 even the 4.1% increase will not take it to the threshold.

[barry1010]

Basic state pension has never exceeded the tax threshold so has never been taxed. It counts towards taxable income

[ToraToraTora]

It's always been taxable as part of overall income. Those on state pension alone will not pay tax. The pensioners income tax threshold is £12,570.

[Maydup]

I realise it's always been taxable but OH has the Additional State Pension and will receive over £13k from April. 

[Maydup]

Letter received today informing of the increase.

[davebro3]

If he has income elsewhere (private pension?) that's taxed under PAYE his tax code will be adjusted to take the bit of tax on state pension.

[davebro3]

I think....

[Maydup]

No he only has state pension. It will be £13,100 pa from April

[Maydup]

The Additional state pension element he receives used to be called Serps if that helps explain how his pension is made up. 

[bednobs]

Hell only pay 20pc on the amount above the threshold though won't he? From your and ttt figures that is less than a tenner a month

[THECORBYLOON]

HMRC will let him know how much tax is due.

This link gives more details.

https://www.gov.uk/tax-on-pension/how-your-tax-is-paid

[Maydup]

My point exactly, it's such a small amount to collect that it will cost more in admin to do so.
However when HMRC do send the notification, many pensioners will not have realised they are over the threshold until presented with a bill for £100.

[ToraToraTora]

so he'll pay (13100-12570)*20% = £134 not going to break the bank is it?

[barry1010]

That's what's caused the confusion, he doesn't get basic state pension, he gets an enhanced state pension and that has always been taxed if it exceeds the threshold 

[THECORBYLOON]

TORATORATORA, I think you need to check your calculator, I make the tax to be £104.

[davebro3]

106 ?

[ToraToraTora]

11:05 should be £106

[THECORBYLOON]

I got the calculation correct but typed the wrong figure. 

That'll teach me!