A question about state pension and tax deductions
For 35 years I worked and was deducted high national insurance contributions towards a SERPS pension - (known as State Second Pension). Now that I am retired, I am told that 7% of my State Pension is to be clawed back as tax! This comes as a shock as I had been surviving on very little money following injury for six years. I have very little in terms of savings and my State Pension is all I have. It does not stop there however...
I asked that it be deducted at source but the Tax Office cannot give a tax coding for State Pensions and require me (untill the day I die) to fill out their Self-Assessment as this is the only way they can collect the tax! Self-Assessment is practically a book by the way and it is also suggested that I need an accountant.
The tax is demanded as a lump sum at the end of the year. But, if you are on any benefit like council tax benefit, benefits get affected as authorities refuse to accept that my pension is taxable as it is not taxed at source and they don't see why they should muck around with tax formulas to work it out.
I am therefore being denied benefits I should be entitled to as the state pension shown is not the amount I am given to live on as 7% of it is taxed. In a court case I am involved in, I should be entitled to exemption of court fee because of my limited finances, but they will not take the tax into account.
Has anyone else experienced a problem such as this? Why did I pay a higher rate of national insurance contribution for all my working life to provide me with a pension when the government just takes 7% of that back in tax?
By: Doreen Jenkinson
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To Anonymous. At my time of retirement at 65 years of age,I had worked and paid NI for 50 years, I also paid serps and graduated pension contributions. At that same time a worker had to have paid 49 years of NI, not 39 years. You say that you payed NI for 39 years and yet retired at 65. that puzzles me somewhat, 39 + either 15 years or 16 years (school leaving age) makes a total of either 54 or 55...??? yet you say you retired at 65. Did you not start work until you were 26 years of age. Just curious.
Regarding state pension and tax....my personal allowance for 2011-2012 exceeds my state pension by almost £1000, I therefore do not pay tax on my state pension.
Regarding state pension and tax....my personal allowance for 2011-2012 exceeds my state pension by almost £1000, I therefore do not pay tax on my state pension.
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I've paid NI contributions for 39 years and on reaching the age of 65, did not qualify for a full state pension. Recent changes mean that only 30 years NI contributions will be required for a full state pension. Now, where's the fairness in that?
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I have this very problem I am being threated with the Bailiffs as I have not paid any tax on my State Pension for 5 years and only just found out!. On research it appears that When I claimed Pension Credit the amount of state Pension should be net not gross, thereby allowing them to increase my Pension Credit by the amount of the IC, but, as you say, I do not know that amount until 12 months latter. Stupid really it is one gov dept to another, so why do I have to be threatened!!
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snowed upnder - 21-Mar-11 16:27
I wonder if somebody from the united states can answer a query I have. In the UK our crisps come in about 25 different flavours. salt and vinegar, cheese and onion, chicken, beef, marmite to name but a few. A friend of mine say"s that in the US you only eat ready salted which I find astonishing, is that true?. I would also like to here from canadians and australians about there crisp eating habits. Thanks guys.
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Crisps Lover - 10-Feb-11 08:54
Oh and I forgot we look down our silly noses of the French when they revolt well you see they have had a capitalisy inspired war on their soil and don't trust their politicians as no one should, it is only dimwits like the brits and the yanks do.
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Look Britain is where the people are educated on the front page of the Sun and get their education certificates from mcdonalds, we have imported the free trade free raid capitalism from the the den of iniquity>america, where everything is for sale including your family! We have american banks who stole and theived from the british people billion upon billion of pounds to bankrupt the country, and they are now making more profit thn they were before the country was brought to knees by them, we also have pliticians who spend their days putting in place the policies that big american business wants which is totlally against the workers and we still listen to them after they themselves stole our money in their expenses claims by the billion, now the coalition are carrying on what thatcher did was to sell all of the assets that you and I bought with the aid of previous generations coal-gas-water etc>> remember thatcher, well you voted for her, even all the newspapers are owned by yanks and aussies, so no one is able to talk to each other without the spin. It's only capitalism which has no regard for people... wake up and think
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Woah... hold on there boys, you aint seen nothing yet. All those poor people who have paid their contributions for 20 years will be retiring later and later. In 30 years the poor peasantry will be forced to slog on until past 70, before enjoying maybe a few years of happy retirement before the health problems, resuting from of a long and stressful working life begin to impinge.
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it is grossly unfair to tax the state pension, when pension credit is not taxed. One pays tax on the contributions, therefore, one is being taxed twice. I pay 14% tax on my state pension and serps and a small civil service pension. I also have to pay council tax and am left with very little to live on. I feel very bitter about the whole thing because I have to pay for dental and optical treatment as well. It is much better to be on pension credit and get free council tax, rent or mortgage tax relief, free dental and optical treatment plus many other benefits A lot of people I know spent all there money on holidays and never paid tax anyway, because they always worked for money in their hand.
I therefore feel that the writer is justified in being bitter because it is not fair in the least. It is certainly not sensible to save, because when you reach pension age you have to watch the pennies because there are no freebies for you.
I therefore feel that the writer is justified in being bitter because it is not fair in the least. It is certainly not sensible to save, because when you reach pension age you have to watch the pennies because there are no freebies for you.
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The tax system has to be complicated! the more complicated the government can make it, the more box ticking, telephone answering, wasterers the government can employ to run it.
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Gainsborough lad. - 25-Dec-09 07:13
In order to assist the elderly with the high costs of council tax and fuel costs, the Government should increase the allowance before tax to £15000.
This would at one stroke; help to stop the thousands of old people dieing from hypothermia each year.
This would at one stroke; help to stop the thousands of old people dieing from hypothermia each year.
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30.03.08 Why do people over 65 and born after 1935 have a low tax code ie 200- 300 yet
anyone under 65 or born before 1935 have a code of 500-600. I pay tax on everything over £40 odd pound a week yet if I was in the higher tax code bracket I could earn over £100 pound a week before tax. It seems so unfair when on a low income.
anyone under 65 or born before 1935 have a code of 500-600. I pay tax on everything over £40 odd pound a week yet if I was in the higher tax code bracket I could earn over £100 pound a week before tax. It seems so unfair when on a low income.
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Doreen doesn't mention that her few savings, probably came from income that has already been taxed when she earned it. Now the savings interest to be declared as another source of income, may have had 20% taken off it by a building society, for example. But if the rate of inflation is not much less than the interest paid by the building society, the actual income is effectively negligible or much less than the 20% tax paid assumes its value to be. Almost all the benefit of investing it in a savings account goes to the Tax Collectors. I suppose, for those with spare cash, this is a good incentive to spend your money while you can, hopefully on something that significantly increases in value. Then, just wait for the Tax Collectors to pounce when you die! It would be much simpler in Tax returns if they could accept that the 'pound of flesh' has already been paid in the case of pensioners, who generally would like to pass on their savings intact, to their own choice of beneficiary.
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The main thing wrong with self assessment tax is the stupid tax form they give you to fill out. The boxes on it simply do not match up with the tax documentation you are given, like the P60 and P11d etc.. So what should take literally 2 minutes takes hours. And the language used on the form is something from outer space.
And then what you can claim for is not explained properly. Well that's what they want. They don't want you to claim for anything nowadays.
And then what you can claim for is not explained properly. Well that's what they want. They don't want you to claim for anything nowadays.
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Domiciled tax slave - 22-Jun-07 22:59
Any kind of tax is complicated these days. I wish that they would make tax matters and in particular self assessment a lot clearer.
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Actually tax has become easier in recent years. It's simple. You will pay tax on everything you earn. There are no real special allowances any more, no rebates, no mortgage discounts: nothing.
The only way you can avoid tax is by not declaring your income, very difficult to do with a State Pension.
You're even supposed to collect and pay the income tax of a house cleaner or home help you might "employ" part-time, even if only for a couple of hours every other week. I bet you didn't realise that. The Government is trying to close in on the Black Economy.
The real crooks live in tax havens, like the Channel Islands. These tax havens should closed down. If the money was earned in this country, paid in this country. pay up.
The only way you can avoid tax is by not declaring your income, very difficult to do with a State Pension.
You're even supposed to collect and pay the income tax of a house cleaner or home help you might "employ" part-time, even if only for a couple of hours every other week. I bet you didn't realise that. The Government is trying to close in on the Black Economy.
The real crooks live in tax havens, like the Channel Islands. These tax havens should closed down. If the money was earned in this country, paid in this country. pay up.
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Tax-a-doodle-do - 9-Feb-07 19:03
Now you're pensioned you have all the time in the world to read that book on Self-Assessment which none of us who are still employed ever have had.
As an oldie you probably will be able to summon the assistance of institutions like "Help the Aged" or the "Citizens Advice Bureau", or whatever charity supports your particular affliction.
Get the House of Lords or any elderly member of it on your side. They can pursue individual cases. In the next 20 years oldies will become the majority electors: goverments beware of upsetting them.
Become an "expert" in oldie's tax: sell your services to others. You will make a nice income from this.
As an oldie you probably will be able to summon the assistance of institutions like "Help the Aged" or the "Citizens Advice Bureau", or whatever charity supports your particular affliction.
Get the House of Lords or any elderly member of it on your side. They can pursue individual cases. In the next 20 years oldies will become the majority electors: goverments beware of upsetting them.
Become an "expert" in oldie's tax: sell your services to others. You will make a nice income from this.
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