Income tax on UK pensions

[johnmell]

Hi,

     I have just started receiving the UK state pension, and when added to my company pension is over the £12,500 personal allowance limit. 

My query is am i supposed to inform somebody about this or will the authorities already know this.

 

                         Many thanks

[MartinL]

Tell HMRC - they and DWP don't seem to communicate. Just go to the HMRC 'Personal Tax Account' page (you might have to set-up a new account but quite easy) and you can tell them online in a few seconds. It says somewhere there that you must tell them of any changes that might affect tax.

 

I started receiving my SP last July but, because of issues with payment, I didn't tell HMRC until October when those issues were resolved. I told them the exact weekly amount but they said they had to contact DWP and wait until they gave confirmation, which took a few more months. As a result, additional tax wasn't taken until January and I've ended the tax year owing about £750 (EDIT - my calculation). While I'd prefer to pay that in cash/bank transfer etc., it seems, at the moment, that they can only take it as a change to tax code, which I don't like. Still awaiting the outcome of a query on that subject so can't give any firm information.

Edited April 15, 2020 by MartinL

[steve187]

you need a tax coding, which your private pension will use to collect any tax due.   

 

don't forget if your wife has a tax allowance from the UK, and she has unused allowance, you can claim 10% of her allowance

[khm2412]

This may be useful.  https://www.gov.uk/tax-uk-income-live-abroad

[Jomtien john]

Had same problem 5 years ago phone international pension office it seems a problem to pay so they reduced my state pension for 3 months to take the money owed no tax code change, also remember that your pension is frozen at todays rate with no fuel payments etc so if you are eg in thailand 10 in years time your pension will still be at todays rate.

[English Engineer]

It is important that you inform HMRC that your pension is frozen. I found that despite my pension being frozen. HMRC assumed my SP would rise as though I in the UK. I was therefore over taxed. 

[ian carman]

52 minutes ago, Jomtien john said:

Had same problem 5 years ago phone international pension office it seems a problem to pay so they reduced my state pension for 3 months to take the money owed no tax code change, also remember that your pension is frozen at todays rate with no fuel payments etc so if you are eg in thailand 10 in years time your pension will still be at todays rate.

It will be interesting if they apply the same rules to expats living in former eu countries .If not a clear case of discrimination and I can see lawsuits. 

[chilly07]

You will need a tax code for the amount over 12500 which will be at 20pc. In my case they deduct from a private pension by sending them my tax code. Married couple transfer has been cancelled from April for no good reason as it is offset against tax credits which I cannot claim.

[mrfill]

HMRC are automatically notified by the DWP.

[Kalasin Jo]

3 hours ago, ian carman said:

It will be interesting if they apply the same rules to expats living in former eu countries .If not a clear case of discrimination and I can see lawsuits. 

Do you mean retired Brits living in EU countries? EU law required the UK to uprate its pensioners living in another EU state, whilst the UK was a member state. The UKs exit is governed by Treaty now, known as the Withdrawal Agreement. It contains a whole section on the rights of those Brits legally living ( many were not) in an EU state and those EU citizens legally living in the UK before brexit and up to the end of the Transition period. It includes a state pension uprating guarantee for as long as they continue to do so and continued payment by the UK of healthcare if entitled (state pensioners and some other categories) on the same basis as prior to the UKs exit. In no EU country is healthcare completely free as it is in the UK and this guarantee only covers that which is paid by the EU state's system.

 

UK frozen state pensions for expats in many but not all countries is a scandal. Check out and join endfrozenpensions.org

 

The fact that the UK treats it's state pension payments as a benefit not a right is a scandal too, as a benefit can be withdrawn. We paid in for all those years, it is our money doesn't wash either. The govt line is that it never was a contributory scheme towards your own pension but that working people paying in were/are funding current pension payments out to pensioners.

 

The huge cost of Covid is also now encouraging some to  raise yet again the whole question of whether pensions should be increased annually by what is known as the triple lock formula

 

Honestly? Expect trouble ahead with no legal right of redress.

[johnmell]

Thanks for all the advice. I have got a tax code on my company pension statement. I will presume they will sort out the tax without me doing anything at the moment, and if nothing happens after a couple of months , enquire further.

 

The stuff i got from the DWP never mentioned income tax, which would suggest they will sort it out.

[sandyf]

5 hours ago, johnmell said:

Thanks for all the advice. I have got a tax code on my company pension statement. I will presume they will sort out the tax without me doing anything at the moment, and if nothing happens after a couple of months , enquire further.

 

The stuff i got from the DWP never mentioned income tax, which would suggest they will sort it out.

I never told them anything. They just sent me a new code and I just claim the refund every year.

[Epidemiologist Dave]

I have not been back to the UK for 11 years and each year I have had to phone both HMRC and DWP  because my frozen state pension has been shown as increasing. Last year HMRC said they cannot change the details unless they are informed by DWP and DWP said they cannot inform HMRC about changes unless requested to do so. Total incompetence. I just hope that this year someone at HMRC realises that my state pension has not risen since 2008.

[maxcorrigan]

19 minutes ago, sandyf said:

I never told them anything. They just sent me a new code and I just claim the refund every year.

Sandy i have not seen anything on a refund, maybe i'm missing the obvious, i just get the yearly coding and left it at that, will look closer this time though, now they've stopped allowance for wife (can't recall exact name for this so called benefit)

[steve187]

1 hour ago, maxcorrigan said:

Sandy i have not seen anything on a refund, maybe i'm missing the obvious, i just get the yearly coding and left it at that, will look closer this time though, now they've stopped allowance for wife (can't recall exact name for this so called benefit)

ADI Adult Dependency Increase, if that was stopped your income tax should reduce

[sandyf]

5 hours ago, maxcorrigan said:

Sandy i have not seen anything on a refund, maybe i'm missing the obvious, i just get the yearly coding and left it at that, will look closer this time though, now they've stopped allowance for wife (can't recall exact name for this so called benefit)

The code only dictates how much tax is to be paid. I am in the same boat as Dave just above but I have never bothered about it. I pay a bit too much tax each month and then just claim it back at the end of the year.

The tax is taken from another pension and I will get a P60 in another week or so. Once I have that I will do an online tax return and you get the money in about a week.

 

I hate to tell you this but you have just dipped out. The year 2018/19 had 14 payments, only happens every 21 years.

[OJAS]

23 hours ago, English Engineer said:

It is important that you inform HMRC that your pension is frozen. I found that despite my pension being frozen. HMRC assumed my SP would rise as though I in the UK. I was therefore over taxed. 

To avoid the risk of being over-taxed on one's State Pension in such circumstances. might it, instead, be possible to opt for direct payments to HMRC instead of payments through one's occupational pension tax code? This is how I personally pay tax on my State Pension, although it would, of course, involve having to complete tax returns (which I am, in any event, required to do as a non-resident landlord).

[maxcorrigan]

21 hours ago, sandyf said:

The code only dictates how much tax is to be paid. I am in the same boat as Dave just above but I have never bothered about it. I pay a bit too much tax each month and then just claim it back at the end of the year.

The tax is taken from another pension and I will get a P60 in another week or so. Once I have that I will do an online tax return and you get the money in about a week.

 

I hate to tell you this but you have just dipped out. The year 2018/19 had 14 payments, only happens every 21 years.

I will wait for my P60 then maybe get back to you then, if you don't mind!

[maxcorrigan]

4 minutes ago, maxcorrigan said:

I will wait for my P60 then maybe get back to you then, if you don't mind!

How far back can you claim ie.previous years or just the year ending?

Edited April 17, 2020 by maxcorrigan