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Another State Pension Question

StayinAlive
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Another State Pension Question

#501743

Postby StayinAlive » May 20th, 2022, 2:44 pm

I've just started taking my Pension and I understand when and how much the payments will be.
I have a query about the final payment of the tax year. As things stand my last four-weekly payment will be 23rd March 2023.
However, what happens about the 13 remaining days in the tax year?
Is there some sort of calculation made up to April 5th or, as I suspect, the next payment will be on schedule on 20th April
with the previous payment on 23rd March being the last one to account for on the tax return for 2022/23?

XFool
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Re: Another State Pension Question

#501744

Postby XFool » May 20th, 2022, 2:50 pm

...Nine years later - I'm still working on this one, wrt SA tax return. :?

scrumpyjack
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Re: Another State Pension Question

#501745

Postby scrumpyjack » May 20th, 2022, 3:04 pm

StayinAlive wrote:I've just started taking my Pension and I understand when and how much the payments will be.
I have a query about the final payment of the tax year. As things stand my last four-weekly payment will be 23rd March 2023.
However, what happens about the 13 remaining days in the tax year?
Is there some sort of calculation made up to April 5th or, as I suspect, the next payment will be on schedule on 20th April
with the previous payment on 23rd March being the last one to account for on the tax return for 2022/23?


The state pension is taxed based on the amounts due in respect of a tax year, not the total payments received in that tax year. So if you had been entitled to X weeks of state pension in the tax year, but had only received Y weeks worth in that tax year, you are still taxed on the X weeks figure.

Dod101
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Re: Another State Pension Question

#501747

Postby Dod101 » May 20th, 2022, 3:06 pm

The self assessment return attempts to explain what you are supposed to do but I just take account of the payments I have actually received in the particular tax year on the basis that over a couple of years it will sort itself out. HMRC has never queried it.

Dod

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Re: Another State Pension Question

#501748

Postby XFool » May 20th, 2022, 3:09 pm

scrumpyjack wrote:The state pension is taxed based on the amounts due in respect of a tax year, not the total payments received in that tax year. So if you had been entitled to X weeks of state pension in the tax year, but had only received Y weeks worth in that tax year, you are still taxed on the X weeks figure.

You say that, but...

(I've still got a long running spread sheet on this one)

tjh290633
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Re: Another State Pension Question

#501749

Postby tjh290633 » May 20th, 2022, 3:14 pm

StayinAlive wrote:I've just started taking my Pension and I understand when and how much the payments will be.
I have a query about the final payment of the tax year. As things stand my last four-weekly payment will be 23rd March 2023.
However, what happens about the 13 remaining days in the tax year?
Is there some sort of calculation made up to April 5th or, as I suspect, the next payment will be on schedule on 20th April
with the previous payment on 23rd March being the last one to account for on the tax return for 2022/23?

You will find that, assuming that your payday is the 23rd, you receive the four payments up to that date. Your next payment will be for those due on 30th March and 6th April at the old rate, then those for 13th and 20th April at the new rate. That's what happens to me, anyway, but mine gets paid on Fridays.

TJH

tjh290633
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Re: Another State Pension Question

#501753

Postby tjh290633 » May 20th, 2022, 3:20 pm

XFool wrote:
scrumpyjack wrote:The state pension is taxed based on the amounts due in respect of a tax year, not the total payments received in that tax year. So if you had been entitled to X weeks of state pension in the tax year, but had only received Y weeks worth in that tax year, you are still taxed on the X weeks figure.

You say that, but...

(I've still got a long running spread sheet on this one)

I find that the amount I get taxed on is based on what the DWP tell HMRC. If you do a self-assessment return, the figure is provided by the software used on the HMRC website.

It is usually slightly different from the amount actually received during the tax year.

TJH

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Re: Another State Pension Question

#501758

Postby Dod101 » May 20th, 2022, 3:33 pm

tjh290633 wrote:
XFool wrote:
scrumpyjack wrote:The state pension is taxed based on the amounts due in respect of a tax year, not the total payments received in that tax year. So if you had been entitled to X weeks of state pension in the tax year, but had only received Y weeks worth in that tax year, you are still taxed on the X weeks figure.

You say that, but...

(I've still got a long running spread sheet on this one)

I find that the amount I get taxed on is based on what the DWP tell HMRC. If you do a self-assessment return, the figure is provided by the software used on the HMRC website.

It is usually slightly different from the amount actually received during the tax year.

TJH


That has happened to me sometimes as well. It is to me basically a non issue.

Dod

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Re: Another State Pension Question

#501760

Postby StayinAlive » May 20th, 2022, 3:47 pm

"I find that the amount I get taxed on is based on what the DWP tell HMRC. If you do a self-assessment return, the figure is provided by the software used on the HMRC website.

It is usually slightly different from the amount actually received during the tax year.

TJH"

The problem is that I need to know the exact amount before the end of the tax year as I want to top up the basic rate limit with personal pension drawdown.

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Re: Another State Pension Question

#501767

Postby XFool » May 20th, 2022, 4:28 pm

All this prompted me to have another look at my ongoing spreadsheet: HMRC figure, Received in tax year, 13x Usual monthly SP

Like Dod101 I have been using the amount Received in tax year, regardless of when it is supposed to be for, and then 'correct' the online HMRC supplied figure where necessary. However, from my spreadsheet I see this isn't always going to work. For instance, in the 2014 -15 tax year (when I was not on SA) I received 14 SP payments in the year. The first on 7 Apr 2014, the last on 2 Apr 2015. This meant I received ~£450 more than the HMRC figure (from Tax Code).

In that year, 13x Usual monthly SP was only about £4 more than the HMRC figure. Generally, from my figures, the 'traditional' 13x usual monthly amount always seems to slightly overstates the HMRC figure. The rounded (truncated) Received in tax year figure is usually identical to the HMRC figure. Until it isn't.

In the 2021 - 22 tax year I received 12 monthly SP payments - giving a total a bit higher than HMRC's figure, but rounded figures identical to 13x Usual monthly SP.

Maybe I will check the running totals against each other? Perhaps simply accepting the HMRC figure (with a check) is the easiest and best?

Keep watching the spreadsheets!

StayinAlive
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Re: Another State Pension Question

#501772

Postby StayinAlive » May 20th, 2022, 4:43 pm

This, from the SA150 notes

""Add up the amount you were entitled to receive from 6 April 2021 to 5 April 2022 and put the total in box 8. Do not include any amount you received for Attendance Allowance.
If your State Pension changed during the year or you only received it for part of the year, multiply each amount by the number of weeks that you were entitled to receive it. Add up your amounts carefully.""

The word "entitled" comes up twice here which suggests to me that it is not what you have actually received but what you would have received, for instance, if you were paid weekly rather that 4-weekly.

Alaric
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Re: Another State Pension Question

#501773

Postby Alaric » May 20th, 2022, 4:53 pm

StayinAlive wrote:
The word "entitled" comes up twice here which suggests to me that it is not what you have actually received but what you would have received, for instance, if you were paid weekly rather that 4-weekly.


I think that's what is supposed to happen. You take the 4 weekly amount and multiply it by 13. That may be slightly different from the actual receipts in the tax year since it seems that the payment immediately after the change in amount in April can be a mixture of payments at both old and new rates.

My tax position can be simplicity itself to check where in principle I only pay non PAYE tax on the excess of dividend income over £ 2000. In practice the amount of PAYE allowed for in the tax code never quite comes out the same as the self assessment calculation. I have assumed this is down to the vagarities of the interaction between a payment system (PAYE) based on 12 payments a year and another (State Pension) based on 13 payments.

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Re: Another State Pension Question

#501777

Postby XFool » May 20th, 2022, 5:12 pm

Alaric wrote:My tax position can be simplicity itself to check where in principle I only pay non PAYE tax on the excess of dividend income over £ 2000. In practice the amount of PAYE allowed for in the tax code never quite comes out the same as the self assessment calculation. I have assumed this is down to the vagarities of the interaction between a payment system (PAYE) based on 12 payments a year and another (State Pension) based on 13 payments.

Surely the straightforward explanation for this is that the SA calculation is retrospective and based on actual figures, while PAYE is based on the Tax Code calculated ahead of the tax year to which it is applied. While some figures are known in advance (e.g. pensions) others (e.g. dividends) can not be and so are based on last years figures in working out the Tax Code?

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Re: Another State Pension Question

#501787

Postby Alaric » May 20th, 2022, 5:57 pm

XFool wrote:While some figures are known in advance (e.g. pensions) others (e.g. dividends) can not be and so are based on last years figures in working out the Tax Code?


I don't allow any estimate of dividend taxation to be included in my PAYE code, so it only contains the State Pension amount, which as you say is known. I beliive that even if someone only had the State Pension in addition to a PAYE occupational pensiion, that if they were to fill in a Tax Return, there would still be some small amount owing to HMRC or a small rebate due.

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Re: Another State Pension Question

#501854

Postby tjh290633 » May 20th, 2022, 10:56 pm

XFool wrote:All this prompted me to have another look at my ongoing spreadsheet: HMRC figure, Received in tax year, 13x Usual monthly SP

Like Dod101 I have been using the amount Received in tax year, regardless of when it is supposed to be for, and then 'correct' the online HMRC supplied figure where necessary. However, from my spreadsheet I see this isn't always going to work. For instance, in the 2014 -15 tax year (when I was not on SA) I received 14 SP payments in the year. The first on 7 Apr 2014, the last on 2 Apr 2015. This meant I received ~£450 more than the HMRC figure (from Tax Code).

In that year, 13x Usual monthly SP was only about £4 more than the HMRC figure. Generally, from my figures, the 'traditional' 13x usual monthly amount always seems to slightly overstates the HMRC figure. The rounded (truncated) Received in tax year figure is usually identical to the HMRC figure. Until it isn't.

In the 2021 - 22 tax year I received 12 monthly SP payments - giving a total a bit higher than HMRC's figure, but rounded figures identical to 13x Usual monthly SP.

Maybe I will check the running totals against each other? Perhaps simply accepting the HMRC figure (with a check) is the easiest and best?

Keep watching the spreadsheets!

I have just checked my tax returns, and the figure supplied by the DWP is in fact 13 times the monthly payment, or 52 times the equivalent weekly payment, for the amount given in the original pension calculation.

This means that it is slightly higher than the actual amount received in the tax year, when the first payment received after 5th April may have up to 3 weeks at the previous rate.

TJH

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Re: Another State Pension Question

#501975

Postby Lootman » May 21st, 2022, 2:46 pm

scrumpyjack wrote:
StayinAlive wrote:I've just started taking my Pension and I understand when and how much the payments will be.
I have a query about the final payment of the tax year. As things stand my last four-weekly payment will be 23rd March 2023.
However, what happens about the 13 remaining days in the tax year?
Is there some sort of calculation made up to April 5th or, as I suspect, the next payment will be on schedule on 20th April
with the previous payment on 23rd March being the last one to account for on the tax return for 2022/23?

The state pension is taxed based on the amounts due in respect of a tax year, not the total payments received in that tax year. So if you had been entitled to X weeks of state pension in the tax year, but had only received Y weeks worth in that tax year, you are still taxed on the X weeks figure.

Yes, this is correct, the only thing that matters is the amount of state pension accrued in the tax year. What amount was actually paid out in the tax year is ignored.

My accountant asks me annually just one question about the state pension. What is the weekly amount? That is all he needs, presumably multiplying it by 52.

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Re: Another State Pension Question

#502029

Postby XFool » May 21st, 2022, 7:02 pm

XFool wrote:All this prompted me to have another look at my ongoing spreadsheet: HMRC figure, Received in tax year, 13x Usual monthly SP
...
Maybe I will check the running totals against each other? Perhaps simply accepting the HMRC figure (with a check) is the easiest and best?

Keep watching the spreadsheets!

Well indeed I did this, going back to 2014 - 15, using the spreadsheet ROUNDDOWN() function to conform with the HMRC approach. I used the HMRC figure as the benchmark and found the 13 x Usual monthly amount (52 x DWP SP notification figure) to be very close to the HMRC figure, just a tiny bit higher. The Received in tax year was bumpier but cumulatively came in significantly lower. :!:

So it looks as though in future I may be using the HMRC figure on my return. :)

tjh290633 wrote:I have just checked my tax returns, and the figure supplied by the DWP is in fact 13 times the monthly payment, or 52 times the equivalent weekly payment, for the amount given in the original pension calculation.

This means that it is slightly higher than the actual amount received in the tax year, when the first payment received after 5th April may have up to 3 weeks at the previous rate.

One small query - above I use the term HMRC figure to mean the figure given on the HMRC Notice of Coding, not on the HMRC online SA form. Now one would expect these to be identical but, as I have been 'adjusting' the online HMRC SA figure I now do not have any records of that to confirm it is identical to the Tax Coding figure. I seem to remember past experience has shown some differences in some PAYE figures and the online SA figures can occur.

So indeed, as far as the OP is concerned, the answer would be to simply take the figure given for the SP on their HMRC notice of coding.

Alternatively, 13 x the normal monthly SP payment would seem to be the nearest to that figure. As this figure itself is simply 4 x the weekly DWP SP figure then yes, 13 x 4 = 52 x the weekly SP as per the DWP notification letter would be the nearest (if possibly a tiny bit high).

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Re: Another State Pension Question

#502064

Postby DrFfybes » May 22nd, 2022, 9:11 am

StayinAlive wrote:"I find that the amount I get taxed on is based on what the DWP tell HMRC. If you do a self-assessment return, the figure is provided by the software used on the HMRC website.

It is usually slightly different from the amount actually received during the tax year.

TJH"

The problem is that I need to know the exact amount before the end of the tax year as I want to top up the basic rate limit with personal pension drawdown.


Having done this to the Nth degree with MrsF's SIPP to get her just under the 40%, I then sat back and looked at it a bit more dispationally. Like you, there is an income of circa £50k. That level of income allows a reasonable amount of discretionary spend, perhaps an adhoc meal out, grabbing a couple of bottles of wine from a merchant, that nice top in White Stuff/M&S that was £49 bloody quid but might be gone before the sale starts, paying for grandchildren's shoes or a monthly payment into their JISA, etc etc.

And I realised I was spending hours on and off trying to save £20 in tax, so just erred £100 (or in your case about £210 and £40 in tax) on the side of caution. I know, the exercise in getting it right is part of the fun, but there are only so many hours in the day :)

Paul

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Re: Another State Pension Question

#502127

Postby XFool » May 22nd, 2022, 1:15 pm

XFool wrote:So indeed, as far as the OP is concerned, the answer would be to simply take the figure given for the SP on their HMRC notice of coding.

Alternatively, 13 x the normal monthly SP payment would seem to be the nearest to that figure. As this figure itself is simply 4 x the weekly DWP SP figure then yes, 13 x 4 = 52 x the weekly SP as per the DWP notification letter would be the nearest (if possibly a tiny bit high).

Just to point out that really there is no "normal monthly payment" wrt the SP - which is NOT calculated/paid monthly, rather it is by default calculated and paid weekly. It is a weekly payment, though it can be paid out every four weeks. Not exactly the same thing as a monthly payment, such as a salary or company pension.

I believe the new tax year's pension values are effective starting from the first Monday of the new tax year, but the SP is tied to the same day of the week of your original state retirement birthday - which for me means the new year's SP is calculated wrt the Tuesday of the first week in the new tax year (always one day later than the Monday for my employee pension)


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