UK Tax Code Changes (re State Pension Increases)

[a3tsw]

My State Pension has now moved higher than the tax-free allowance (£12,570) following this Years increase of 8.5%

On my Notice of Coding for 2024/25.

the treatment for tax purposes of my State Pension remains untouched ie the excess has not been taxed DIRECTLY

, but I have been given a K-- code , which means that the tax that I should have been deducted from the State pension is deducted from a secondary pension that I receive.

The secondary pension then is first taxed as per normal ie -20%.

The remainder is then taxed using the K-- code/12 as it is paid Monthly.

I do not know what would happen if one is only in receipt of the State Pension , but by the looks of it , it would appear that the tax would be held as a debt owing to HMRO. 

[hotandsticky]

32 minutes ago, proton said:

 

State pension is less than the personal tax allowance so is not taxed, other pensions taking you over that and interest on savings over 1k a year is.

 

 

So, do you still think my post is "nothing to do with pensions?"

[lungbing]

9 hours ago, Moonlover said:

If you have an on-line account with HMRC it is a very simple procedure to correct the amount of state pension you're receiving. Your coding will then be amended and the appropriate tax deductor (usually another pension payer) will be informed of the change. 

I'm sorry but that's not my experience. Vi my online account  I told them 5 times last tax year that I do not receive the increase and each time they signed it off as completed without altering the wrong  code.  In the end I rang them in February and it was corrected at once.

[Mutt Daeng]

17 hours ago, Mutt Daeng said:

HMRC are still sending out tax code notices by post. I got one in mid February. This was after I discovered my tax code was wrong using the HMRC app. I contacted them to sort out the issue after HMRC had "assumed" that I would receive the SP increase and adjusted my tax code to cater for that. I contacted them via their webchat and they "fixed" my tax codes for 23/24 & 24/25. I had to do this last year as well. Looks like it's going to happen every year as someone has already stated, HMRC can't tell (or don't care) who is frozen and who is not, so they assume everyone gets the rise, putting the onus on the individual to check their tax code and then if it's wrong, take steps to have it corrected.

My last statement is incorrect. It's not HMRC whose are making the problem, It's the DWP who supply incorrect information to HMRC, I don't see why the DWP can't supply the correct info since THEY know who is frozen and who is not.

[hotandsticky]

1 hour ago, Mutt Daeng said:

My last statement is incorrect. It's not HMRC whose are making the problem, It's the DWP who supply incorrect information to HMRC, I don't see why the DWP can't supply the correct info since THEY know who is frozen and who is not.

 

 

I think the issue is that there is NO system between DWP and HMRC.

[Moonlover]

4 hours ago, Mutt Daeng said:

My last statement is incorrect. It's not HMRC whose are making the problem, It's the DWP who supply incorrect information to HMRC, I don't see why the DWP can't supply the correct info since THEY know who is frozen and who is not.

Oh if only life were that simple, but sorry you're wrong. It is within HMRC where the problem lies. DWP inform those folks at HMRC when you start drawing your state pension and at what rate, but they then leave it to them to figure out the annual increase, using the 'Consumer Price Index'. As both departments use the same figure, they will, of course remain in step. 

 

And the system works, at least it does for the vast majority of pensioners. But not for us, we're a small minority that buck the system and it seems that HMRC does not have a way of catering for this anomaly. It's up to us to 'put the record straight'. 

 

I finally cracked this about 10 years ago, following 3 years of correcting my pension rate on-line and eventually receiving a refund by cheque. (I lived in Egypt at the time and had to mail it back to my UK bank of course)

 

I solved the problem in the end by sending HMRC a good old fashioned snail mail letter. That worked and my pension rate was finally pegged and has not been tampered with for the last 10 years.

[Henryford]

On 4/6/2024 at 8:40 AM, hotandsticky said:

A few people have recently received a revised Notice of Coding which increases the amount of tax paid in the next tax year.

 

This change in coding is solely as a result of the expected increase in state pensions. Many expats living in Thailand do not receive the annual increase in pension so, in these circumstances, will be paying too much tax.

 

Check your coding if you receive a new advice and take it up with HMRC if you think you are affected. 

 

That happened to me last year, they assumed a 10% pension increase. It took me months to get them to correct it.

[Madgee]

On 4/6/2024 at 2:26 PM, proton said:

 

State pension is less than the personal tax allowance so is not taxed, other pensions taking you over that and interest on savings over 1k a year is.

Slightly incorrect.  Interest earned over 1k on savings is liable for tax.

[Madgee]

Deleted

[OJAS]

I have come to the conclusion that the only surefire way of dealing with this totally unsatisfactory state of affairs in my case is through filing tax returns with HMRC. Even though I no longer, in theory, need to file tax returns following the sale of my UK property in late 2021, I have opted to continue doing so precisely because of the problematical issues referred to this thread. In completing a tax return I always instruct HMRC not to collect any tax due in respect of my State Pension through my tax code by checking the 2 appropriate boxes in the SA100 form. Instead I make direct on-account and balancing payments to them based on the actual State Pension payments total for the tax year in question as reported in that form.