100th Entry RAF Locking 1962-1964

chuck shenton · Last edited by chuck shenton on Sun May 31, 2009 7:15 pm; edited 1 time in total

With the big six-five looming on the horizon, probably like most of you I thought it was time to see what the state pension is all about. As you would expect with government-run services it's all fairly complex and there are plenty of rules and caveats to wade through, and things get worse when you take the tax implications into account. As a result, I have a question regarding the state pension and income tax.

The basic UK state pension is currently £95.25 per week, but the actual pension that you get depends on how many 'qualifying years' you have accumulated during the period from age 18 to 65. On top of that, your pension may be increased if you have made any contributions to the various top-up schemes.

Also, your 'legal partner' (wife) can claim an additional £57.05 per week based on your pension, provided that she is 60 or over. But, as this is in place of any state pension that she may already be receiving in her own right, the decision for her to claim or not seems to be straightforward.

That's all as clear as mud, but there is a possible complication on the income tax side. If your legal partner claims a pension on the basis of your pension, is that treated as part of her income or is it treated as part of your income? In many situations, this will affect how much tax you pay as a couple. Of course, it all depends on your individual incomes and thus your marginal rates of income tax. Incidentally, it seems that the married man's tax allowance has been scrapped (unless you are 75 or over and your income is below a specified amount). So currently each partner gets a basic tax allowance of £6,475 and that's that. When was the married allowance cancelled?

I suspect that your partner's pension is treated as her income and not yours, but it is not clear. Does anyone know for sure?

http://www.thepensionservice.gov.uk/state-pension/home.asp

http://www.hmrc.gov.uk/incometax/index.htm

admin · Posted: Sun May 31, 2009 6:04 pm Post subject:

Yes, all very confusing. I got a pension forecast a few weeks ago (you can do it on line) which confirmed what I will get based on the pre- April 6th 2009 rate. I will get the full rate even though I had not contributed for sufficent years when I retired aged 55. Most people will get Graduated Pension on top of the basic pension and possibly some Additional Pension (for any years not in an Occupational Pension). What confuses me is how tax will be deducted. Currently BAe Systems deduct tax from the pension they pay me, but how will they know what I am getting in state pension? Maybe it's reflected in a revised tax code.
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chuck shenton · Posted: Sun May 31, 2009 7:10 pm Post subject:

Hi Tony,

As far as I can tell, it seems that the IR don't normally deduct income tax directly from your state pension. Instead they seem to get any tax payable from other sources- if you are still working, via PAYE or otherwise from any private pension schemes you may have.

Like me, you will probably get a letter from the IR asking if you will be getting a state pension at age 65, and if so, how much. Although, at fist this seemed odd, I now realise that it is an option not to take the state pension at 65 and to let it acrue so that you get a higher pension at a later date.

As you say, your tax code is adjusted to suit your new financial situation when you draw your state pension. It all seems a bit messy but the objective is probably to get the private sector to carry out the tax collection for the IR!

Frank · Posted: Mon Jun 01, 2009 6:15 am Post subject: Income Tax Rules

Hi Chuck
I learned a lot about tax when l coputerised an accountants practice. He insisted l knew how to make accounts and balance sheets before l started so l spent nearly 2 years doing the job. It is not that complicated. I will ignore over 75 as we are no where that situation yet.

Marriage Allowance was scrapped by the left wing tosser Brown rhe Clown as one of his first actions when he came to power in 1997.

Everyone is entitled to personal allowance and you are correct in 6745 is your basic tax allowance (sorry - my computer doesn't do pound signs) but when you are 65, it rises to 9490. It used to be that you received that allowance for the whole of the tax year in which you became 65 but the thieving twat Brown has probably made it pro-rata.
All income and pensions are taxable with the exception of war disability pension which is tax free.
The 1st 34,700 of income is taxed at 20% and above that at 40%.
If you have savings income then the first 2440 is taxed at 10% with the rest at 20% or 40% if over 34,700 per annum.

You are right in that your wifes ncome is her own and taxed independently of you but ff her income is less than the tax threshold, then she can transfer the balance to you.

There are also rules for dividend income.

Your best approach is to go to your local tax office and you will find many very helpful people there. You will met the odd a*****le but if you meet less of them than good guys in a day, then that was a good day!

They will help and advise and give you leaflets in any language you want.
Take all your P60s including bank accounts and Building Society Accounts. If they have not sent you one, contact the branch and ask for it.

If things have changed and they no longer can help you, then l can recommend an ex District Inspector of Tax who runs an excellent practice and as he is gamekeeper turned poacher, he will ensure your tax position for a very competitive rate. Just email me and l will send you his details. He has cliens all over the world so it doesn't matter if your contact with him is by letter, telephone or email.
Best regards
Frank

chuck shenton · Posted: Mon Jun 01, 2009 8:06 am Post subject:

Hi Frank,

Thanks for such a full and helpful response- sounds like you are a bit of a whiz at this tax business.
You said:

'You are right in that your wife's income is her own and taxed independently of you but ff her income is less than the tax threshold, then she can transfer the balance to you.'

That confirms that a wife's pension is taxed as her own income, even though her pension may be by virtue of her husband's pension. I suspected that would be the case, but what I didn't know was that any tax allowance not used by the wife could be transferred to the husband. That aspect will probably benefit quite a few of us.

chuck shenton · Posted: Wed Jul 29, 2009 11:10 am Post subject:

Just a small point which may be worth looking into: I think you need to claim the state pension rather than it automatically being paid at 65. Do the pension services contact you or is it up to you to contact them. The time is near for many of us (and past for one).

admin · Posted: Wed Jul 29, 2009 11:41 am Post subject:

It's not automatic, you have to claim it but they should contact you with an invitation to claim 4 months prior to your 65th birthday http://www.thepensionservice.gov....-pension/basic/how-do-i-claim.asp
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chuck shenton · Posted: Wed Jul 29, 2009 11:46 am Post subject:

Thanks Tony; what are you going to spend your dosh on?

admin · Posted: Wed Jul 29, 2009 12:28 pm Post subject:

I've got my eye on a very nice zimmer frame and bath chair set with matching commode.
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chuck shenton · Posted: Wed Jul 29, 2009 1:15 pm Post subject:

Och Aye; you re nothin but a spendthrift. Smile

admin · Posted: Wed Sep 02, 2009 9:07 am Post subject:

This may be of interest to some 100th members who live outside the UK...
http://news.bbc.co.uk/1/hi/business/8232612.stm
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TONY LINDON - click here for 100th Entry web site member's page

GeoffW · Posted: Thu Sep 03, 2009 4:00 am Post subject:

Thanks for the link Tony, what a weird world we live in---

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All the best
Geoff
Do it while you can and grow old disgracefully!

admin · Posted: Sat Oct 03, 2009 12:41 pm Post subject:

Apart from Monty, there were 5 new 100th OAPs in September and, by the end of the year, there will be another 16. These figures relate to registered 100th members who have provided their DoB to me, so the actual figures could be almost double. Next year will see many more of us joining the club and I for one would expect to receive my invitation in the next few weeks.
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TONY LINDON - click here for 100th Entry web site member's page

john rogerson · Joined: 23 Aug 2006 Posts: 78

Surprised you haven't started a zimmer frame business, Tony, for all our OAPs!!!

chuck shenton · Posted: Sat Oct 03, 2009 7:01 pm Post subject:

Tony you said:
'I've got my eye on a very nice zimmer frame and bath chair set with matching commode.'

Well I'm saving up for one of these:

admin · Posted: Sat Oct 03, 2009 7:09 pm Post subject:

Brilliant Chuck. I want one!
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TONY LINDON - click here for 100th Entry web site member's page

admin · Posted: Wed Oct 14, 2009 4:05 pm Post subject:

This explains how you pay tax on your pension...
http://www.direct.gov.uk/en/Money...sPensionsAndMaintenance/DG_172143

Presumably this is why you have to give them your tax reference number when you apply for your pension (I think it's now called a PAYE code on your P60).

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TONY LINDON - click here for 100th Entry web site member's page