2 minutes ago, SheungWan said:

No it isn't. However on receipt of that pension, if your allowance is breached, then your other income will be taxed.

It’s classed as unearned income, the current tax allowance is £11850 that goes against your State Pension what is left is used to assess any other income, private pension or other income.

My Private Pension is taxed as there is not enough allowance left to cover it.

4 minutes ago, jamie2009 said:

It’s classed as unearned income, the current tax allowance is £11850 that goes against your State Pension what is left is used to assess any other income, private pension or other income.

My Private Pension is taxed as there is not enough allowance left to cover it.

The key point I addressed is that no deductions are made on the State Pension payout.

Only because the state pension currently is below the tax threshold.  Should it rise above the threshold then tax would be deducted from the state pension.  There were moves recently to abolish the tax threshold for expats living abroad.  Thankfully, that never came about.

The state pension is taxable income but is currently offset by the tax allowance given.

 

Regarding 'unearned income' and 'earned income', there is, in the main, no differentiation between the two unlike many years ago when it was quite important.

1 minute ago, HHTel said:

Only because the state pension currently is below the tax threshold.  Should it rise above the threshold then tax would be deducted from the state pension.  There were moves recently to abolish the tax threshold for expats living abroad.  Thankfully, that never came about.

The state pension is taxable income but is currently offset by the tax allowance given.

 

Regarding 'unearned income' and 'earned income', there is, in the main, no differentiation between the two unlike many years ago when it was quite important.

I don’t like when they talk about introducing new stuff as it some times comes to fruition.

The Government were also looking at introducing N.I. Contributions after people who retired continued working.

We've been raising this for many years with no success. HMG couldn't care less and never will. 

On ‎10‎/‎13‎/‎2018 at 10:16 AM, SheungWan said:

The key point I addressed is that no deductions are made on the State Pension payout.

In one sense you are right a pensioner with a state pension less than the Tax free allowance will not pay tax. However you are wrong because if the pension were tax free you would not lose any of your tax free allowance and would be able to apply the full allowance against any additional income. It's more about how you explain it than the reality of the situation. If you were to say a pensioner receiving only a state pension effectively gets it tax free you are correct but he has used up some of his tax free allowance.

15 hours ago, Expatwannabee said:

In one sense you are right a pensioner with a state pension less than the Tax free allowance will not pay tax. However you are wrong because if the pension were tax free you would not lose any of your tax free allowance and would be able to apply the full allowance against any additional income. It's more about how you explain it than the reality of the situation. If you were to say a pensioner receiving only a state pension effectively gets it tax free you are correct but he has used up some of his tax free allowance.

There is some confusion because the DWP do not collect tax. It is possible for the state pension to be greater than the allowance and if there was no other income involved then there would be a liability solely on the state pension. If this was the case then you must pay the Inland Revenue directly as it cannot be collected by deduction.

Slighty off topic, but related - I was told by DWP that the tax office would now collect NI contributions together with my self assessment tax liability. To date this has not happened. I have full contributions but assumed I am still liable for the business rate as we have ongoing letting property income, and my wife is still well short of the requisite years contributions for a full pension.

 

I am aware the tax office do not recognise our letting income as a 'business' for tax purposes, i.e. business deduction allowances, but we always paid NI on the old system by standing order to the DWP.

 

Why on earth they had to change the old system which worked like clockwork I will never understand.

 

I will, of course, send them a message asking about this, but wondered if anyone had any information to shed light on this situation? Forewarned is forearmed.

Sharjah is not a country. Do you/they mean The United Arab Emirates?

On 11/11/2018 at 9:15 AM, sandyf said:

It is possible for the state pension to be greater than the allowance

The personal allowance is around 227 quid a week.  I wouldn't have thought there were many drawing a state pension of more.  But I could be wrong!

7 hours ago, HHTel said:

The personal allowance is around 227 quid a week.  I wouldn't have thought there were many drawing a state pension of more.  But I could be wrong!

There is a lot more than you think. I wasn't a particularly high earner and my pension,unfrozen, would be close to the allowance. I worked in a factory once as a manager and the shift workers with their overtime were earning double.

There is a large percentage of the state pensioners that were on contracted out schemes which tends to distort the perception of average.

One of the principal aims of the pension reforms was to stop the additional pension payments and reduce the overall pension liability. In a few years time you will be right, there will no new state pensions over the allowance, people have been forced into making their own additional pension provision.