State Pension - Tax Return

[XFool]

I have an accountant do my taxes and in regards to the state pension he asks me just one question: What was the DWP statement of the weekly amount you receive for that tax year?

He takes that number and multiplies it by 52. Couldn't really be easier and certainly easier than looking up the dates and amounts of 13 payments!

Except that it isn't what I was actually paid, is it. Why the HMRC want to tax me on this figure

It is the 'traditional' 13 times usual monthly payment, as I believe, was the common recommended figure from the help notes accompanying the paper SA (though I think even that wording may have varied year to year!), presumably as a compromise figure to get around working out the fully 'correct' figure.

On my spreadsheet, over the years, its total trends a bit higher than the total amount of SP actually paid.

[XFool]

...where "monthly payments" strictly means 4 weekly payments.

[tjh290633]

2014-15: 14
2015-16: 13
2016-17: 13
2017-18: 13
2018-19: 13
2019-20: 13
2020-21: 12

I don't think that is possible. With 28 days between payments, 12 would occupy 336 days leaving 29 days in the year, in which another payment is due. 12 is impossible, 14 comes round about every 30 years, depending on leap years.

TJH

[XFool]

I don't think that is possible. With 28 days between payments, 12 would occupy 336 days leaving 29 days in the year, in which another payment is due. 12 is impossible, 14 comes round about every 30 years, depending on leap years.

You're correct!

Thanks for mentioning this, as I checked my spreadsheet and found I'd left out the September figure.

So, once again, the total of 13 SP payments in the tax year aligns quite well with the HMRC Tax Coding figure (I should have suspected something awry and looked closer), being about £3 below that figure. The 13 x 'monthly' recipe being £7 above.

[TUK020]

2014-15: 14
2015-16: 13
2016-17: 13
2017-18: 13
2018-19: 13
2019-20: 13
2020-21: 12

I don't think that is possible. With 28 days between payments, 12 would occupy 336 days leaving 29 days in the year, in which another payment is due. 12 is impossible, 14 comes round about every 30 years, depending on leap years.

TJH

To casual observation, it looks like a slow and steady decline. Extrapolate another 5 years and it will get to 11. Probably some new Treasury accounting wheeze.....

[Charlottesquare]

For clients I used to take the May or June receipt, divide by 4 then multiply by 52.

This seemed to give the nearest calculated amount compared with what HMRC include in their coding notice, the letter HMRC issue pre year can also be used but most clients never passed it in.

This also was a lot easier than asking them for a year's bank statements, get say both May and June figures (one is a small control ) and very quick calc that HMRC seem happy being used (well never any complaints)

I also though your online tax account had this info (I am still too young for a state pension)?

[XFool]

For clients I used to take the May or June receipt, divide by 4 then multiply by 52.

i.e. 13 times the usual monthly amount.

I also though your online tax account had this info (I am still too young for a state pension)?

It has a pre-entered value (which I invariably alter slightly). I am not sure exactly how it is derived, I've always vaguely assumed it is the calculated true 'correct value' supplied to HMRC by the DWP, but I don't know. Unfortunately I have never kept a record of it. Perhaps I should try doing so to find out?

[mike]

I'll be reaching pension age next year so this topic has got me thinking.

Is there not an equivalent to the P60 form issued in the personal tax account on line as you get in employment or when taking a private pension ?

It does have what my pension would be this year if I was old enough to take it as a weekly, monthly and annual amount. The annual amount being (52 weeks 1.25 days) times the weekly amount. A normal year is 52 weeks 1 day, and the 1/4 day takes into account leap years.

But as no-one has mentioned this, can I assume there is no equivalent to a P60 issued when you actually do take your pension ?

[genou]

But as no-one has mentioned this, can I assume there is no equivalent to a P60 issued when you actually do take your pension ?

There is no P60, nor any substitute for it, issued in respect of State pension.

[XFool]

...Correct. There isn't.

What there is is the annual statement from the DWP, specifying what your new weekly SP will be in the coming tax year. The only other annual figures supplied are:

On the HMRC annual Notice of Tax Coding before the start of the tax year.
On the online HMRC SA page for the SP, the (alterable) figure is pre-entered.

If I remember correctly (not a given!) these figures are not necessarily exactly the same.

[Arborbridge]

For clients I used to take the May or June receipt, divide by 4 then multiply by 52.

i.e. 13 times the usual monthly amount.

I also though your online tax account had this info (I am still too young for a state pension)?

It has a pre-entered value (which I invariably alter slightly). I am not sure exactly how it is derived, I've always vaguely assumed it is the calculated true 'correct value' supplied to HMRC by the DWP, but I don't know. Unfortunately I have never kept a record of it. Perhaps I should try doing so to find out?

I've never seen this pre-entered value you all mention. Probably because I don't do it on line, but still fill in a paper return.

[Dod101]

For clients I used to take the May or June receipt, divide by 4 then multiply by 52.

i.e. 13 times the usual monthly amount.

I also though your online tax account had this info (I am still too young for a state pension)?

It has a pre-entered value (which I invariably alter slightly). I am not sure exactly how it is derived, I've always vaguely assumed it is the calculated true 'correct value' supplied to HMRC by the DWP, but I don't know. Unfortunately I have never kept a record of it. Perhaps I should try doing so to find out?

I've never seen this pre-entered value you all mention. Probably because I don't do it on line, but still fill in a paper return.

I do my return online and simply use the pre entered value that HMRC kindly offers. It is more or less correct and I imagine of all the ways we can calculate the figure, it is as good as any other. Presumably they balance out from one year to the next.

Dod

[Lootman]

...Correct. There isn't.

What there is is the annual statement from the DWP, specifying what your new weekly SP will be in the coming tax year. The only other annual figures supplied are:

On the HMRC annual Notice of Tax Coding before the start of the tax year.
On the online HMRC SA page for the SP, the (alterable) figure is pre-entered.

If I remember correctly (not a given!) these figures are not necessarily exactly the same.

Note that many people do not get those two additional numbers because they don't have a PAYE coding and they submit paper returns so don't have or need an online account.

Which avoids the whole issue of having to reconcile three different figures. Just use the DWP weekly number times 52 because everyone has that. Simples.

[XFool]

Oh, I nearly forgot. The definitive(?) answer, from the horses mouth!

This matter was the first question up on a SA Tax edition of last Wednesday's BBC Money Box Live on R4.

The experts - Clare Merrills, from HMRC, and Anita Monteith, Head of Taxation Policy, at the Institute of Chartered Accountants in England and Wales - answer (must say they sounded momentarily puzzled) was "Just put down what you received."

Hear it for yourself: https://www.bbc.co.uk/sounds/play/m001gx6c

[XFool]

Oh, I nearly forgot. The definitive(?) answer, from the horses mouth!

This matter was the first question up on a SA Tax edition of last Wednesday's BBC Money Box Live on R4.

The experts - Clare Merrills, from HMRC, and Anita Monteith, Head of Taxation Policy, at the Institute of Chartered Accountants in England and Wales - answer (must say they sounded momentarily puzzled) was "Just put down what you received."

Hear it for yourself: https://www.bbc.co.uk/sounds/play/m001gx6c

Just to draw your attention to this, the latest on this ongoing saga! How to report your SP on your Self Assessment.

It seems to have changed again! It was, I believe, commonly held in the past (I believe I even used to see it in HMRC's Notes) to be 13 * Usual Monthly Amount. I was instead using SP received in tax year (as above), regardless of when it was 'due'. This meant small changes most years to HMRC's prepopulated SA figure.

Having eventually got round to completing my online SA a few weeks ago, I noticed the current online advice on this matter from HMRC is... the 51 + 1 rule.

Total reported SP received in Tax Year = 51 * (This Year's DWP weekly SP) + 1 * (Last Year's DWP Weekly SP)

This looks as if it may even be the method actually used to derive HMRC's own pre-entered figure. (So why didn't they tell us before?)

[Lootman]

Oh, I nearly forgot. The definitive(?) answer, from the horses mouth!

This matter was the first question up on a SA Tax edition of last Wednesday's BBC Money Box Live on R4.

The experts - Clare Merrills, from HMRC, and Anita Monteith, Head of Taxation Policy, at the Institute of Chartered Accountants in England and Wales - answer (must say they sounded momentarily puzzled) was "Just put down what you received."

Hear it for yourself: https://www.bbc.co.uk/sounds/play/m001gx6c

Just to draw your attention to this, the latest on this ongoing saga! How to report your SP on your Self Assessment.

It seems to have changed again! It was, I believe, commonly held in the past (I believe I even used to see it in HMRC's Notes) to be 13 * Usual Monthly Amount. I was instead using SP received in tax year (as above), regardless of when it was 'due'. This meant small changes most years to HMRC's prepopulated SA figure.

Having eventually got round to completing my online SA a few weeks ago, I noticed the current online advice on this matter from HMRC is... the 51 + 1 rule.

Total reported SP received in Tax Year = 51 * (This Year's DWP weekly SP) + 1 * (Last Year's DWP Weekly SP)

This looks as if it may even be the method actually used to derive HMRC's own pre-entered figure. (So why didn't they tell us before?)

As I probably mentioned up thread somewhere, in practice 52 times the weekly SP for that tax year is used by accountants and is accepted by HMRC. Any difference is so trivial that nobody seems bothered in the slightest and it appears that both may be fine. Keep things simple.

[XFool]

Having eventually got round to completing my online SA a few weeks ago, I noticed the current online advice on this matter from HMRC is... the 51 + 1 rule.

Total reported SP received in Tax Year = 51 * (This Year's DWP weekly SP) + 1 * (Last Year's DWP Weekly SP)

This looks as if it may even be the method actually used to derive HMRC's own pre-entered figure. (So why didn't they tell us before?)

As I probably mentioned up thread somewhere, in practice 52 times the weekly SP for that tax year is used by accountants and is accepted by HMRC. Any difference is so trivial that nobody seems bothered in the slightest and it appears that both may be fine. Keep things simple.

I think 51 + 1 is simple enough. And, as it appears to bear HMRC's Seal of Good Housekeeping, that's good enough for me.

But if you want to pay more income tax than needed, go ahead.

[Lootman]

As I probably mentioned up thread somewhere, in practice 52 times the weekly SP for that tax year is used by accountants and is accepted by HMRC. Any difference is so trivial that nobody seems bothered in the slightest and it appears that both may be fine. Keep things simple.

I think 51 + 1 is simple enough. And, as it appears to bear HMRC's Seal of Good Housekeeping, that's good enough for me.

But if you want to pay more income tax than needed, go ahead.

The amount of tax involved is trivial, and it is more a matter of when it is paid rather than how much. By my calculation the difference is less than a quid in my case - a rounding error.

So I will continue to do this as my accountant advises rather than based on what someone on the internet claims.

[XFool]

So I will continue to do this as my accountant advises rather than based on what someone on the internet claims.

The "someone on the internet" is actually HMRC. I am just the messenger, not the message. You could of course check this out for yourself (or your accountant could) - if you (or they) used your online Personal Tax Account.

Whether this is now also stated to be the official method in the paper notes accompanying a paper SA I cannot say. Ask your accountant?

[Arborbridge]

Unfortunately, I've chucked away the instructions for the paper version, but I notice on the paper return it says "the amount you were entitled to receive, not the weekly or 4 weekly amount".

I've always assumed the they actual pay me the amount I am entitled to receive - maybe a folly to do that - so I just list all the payments received in the tax year and declare that. I don't see how that could be wrong since it is the actual income I have received.


Arb.