State pension on self assessment

[Csills73]

Hi All,

I am wondering if anyone could confirm which figure to use on the self assessment tax return for the state pension e.g. for tax year 23-24. Is it the figure on the tax code notice for 23-24 which normally is received in Feb? In this instance received in Feb23.

Many thanks

 

[Newchodge]

Hi All,

I am wondering if anyone could confirm which figure to use on the self assessment tax return for the state pension e.g. for tax year 23-24. Is it the figure on the tax code notice for 23-24 which normally is received in Feb? In this instance received in Feb23.

Many thanks

I use the amount I actually received, which is always less than the amount reported by DWP to HMRC, as you don't receive the increase immediately.

 

[DontAsk]

If you are doing SA, ignore your tax code and just submit actual figures for all income. Tax due will be calculated from those figures.

Apart, that is, from the question about any underpayments that may be included in the coding notice.

 

[David Griffiths]

But bear in mind that pension is paid every four weeks, so you will receive 13 payments in the tax year. The first payment in the year is often less than all the rest because of the change in rates overlapping the tax year.

I've lost count of the number of times I asked a client for the state pension figure and they gave me the last payment multiplied by 12.

I've never seen a significant error in the figure on the tax coding and in many cases it's the easy way to come up with a number without faffing about going back and forth to the client

 

[Csills73]

If you are doing SA, ignore your tax code and just submit actual figures for all income. Tax due will be calculated from those figures.

Apart, that is, from the question about any underpayments that may be included in the coding notice.

Thank you very much for your reply. So I just use the actual pension received shown on the bank statements for the tax year.
Thank you

 

[Newchodge]

But bear in mind that pension is paid every four weeks, so you will receive 13 payments in the tax year. The first payment in the year is often less than all the rest because of the change in rates overlapping the tax year.

I've lost count of the number of times I asked a client for the state pension figure and they gave me the last payment multiplied by 12.

I've never seen a significant error in the figure on the tax coding and in many cases it's the easy way to come up with a number without faffing about going back and forth to the client

I agree that using the tax coding figure does not result in a significant error, but for me it meant paying about £4 tax more than was due, when I checked it with no way of recovering it. While £4 is not a lot of money, it is MY £4, not HMRC's. And it is always in HMRC's favour.

The pension is calculated on a weekly basis and is due at the rate that applied on the first day of the pension week. So unless your pension week starts on 6 April, your first payment is always lower. Plus, because of overlapping tax years your first payment of the new tax year may be 3 weeks at the previous year's rate and 1 at the new rate. Yet DWP always reports the new weekly rate * 4 * 13 for the tax code. When I queried this via my MP I was told that state pensions are always treated on an accruals basis, not a cash basis, which means HMRC alwyas gets more.

Rant over.

 

[DontAsk]

If the OP has other income such as savings or investments then the tax code could be quite out of killer. I always ignore my tax code and just fill in my SA.

 

[MyAccountantOnline]

Hi All,

I am wondering if anyone could confirm which figure to use on the self assessment tax return for the state pension e.g. for tax year 23-24. Is it the figure on the tax code notice for 23-24 which normally is received in Feb? In this instance received in Feb23.

Many thanks

You should declare the amount which you were entitled to receive from 6 April 2023 to 5 April 2024.

Its confirmed here on page TRG 6

 

[Newchodge]

You should declare the amount which you were entitled to receive from 6 April 2023 to 5 April 2024.

Its confirmed here on page TRG 6

Yes, as I said, accruals basis not cash receipt. Which cheats the pensioner, in favour of HMRC.

 

[MyAccountantOnline]

Yes, as I said, accruals basis not cash receipt. Which cheats the pensioner, in favour of HMRC.

Not sure everyone understands what the accruals (or cash) method is.

'Cheats' is maybe a bit harsh - it does mean the recipient pays tax on the income they are due to receive which is the case for other forms of income too.

 

[Newchodge]

Not sure everyone understands what the accruals (or cash) method is.

'Cheats' is maybe a bit harsh - it does mean the recipient pays tax on the income they are due to receive which is the case for other forms of income too.

But they never receive that income. The first payment may be 3 weeks at the previous year's rate and then 49 at the new rate, but tax is levied as if they received 52 weeks at the new rate. When they eventually catch up those 3 weeks it will be in the following tax year when they are again taxed at the new increased rate for 52 weeks.

When the same system is used for other forms of income it is because the total amount of money will be received. That is not the case with the state pension.

 

[MyAccountantOnline]

But they never receive that income. The first payment may be 3 weeks at the previous year's rate and then 49 at the new rate, but tax is levied as if they received 52 weeks at the new rate. When they eventually catch up those 3 weeks it will be in the following tax year when they are again taxed at the new increased rate for 52 weeks.

When the same system is used for other forms of income it is because the total amount of money will be received. That is not the case with the state pension.

Tax is charged on the amount which is receivable ie the amount a pensioner is entitled to receive from 6/4 to 5/4 as stated in the letter the Pension service sends the pensioner.

Why would that amount not be paid to the pensioner?

 

[Newchodge]

Tax is charged on the amount which is receivable ie the amount a pensioner is entitled to receive from 6/4 to 5/4 as stated in the letter the Pension service sends the pensioner.

Why would that amount not be paid to the pensioner?

Because of the way it is calculated. It is a weekly amount, paid every 4 weeks. If a pensioner receives their pension on 7 April they will receive 4 weeks at the previous year's rate. So their annual income is not the new weekly rate*4*52, which is what they pay tax on, it is the new weekly rate *4*48 + the old rate *4.

My pension letter states only a weekly amount and multiplying that by 52 gives a figure that is about £19 more than I will receive through the year. On my personal HMRC account the higher figure is shown as my pension income.

 

[MyAccountantOnline]

Because of the way it is calculated. It is a weekly amount, paid every 4 weeks. If a pensioner receives their pension on 7 April they will receive 4 weeks at the previous year's rate. So their annual income is not the new weekly rate*4*52, which is what they pay tax on, it is the new weekly rate *4*48 + the old rate *4.

My pension letter states only a weekly amount and multiplying that by 52 gives a figure that is about £19 more than I will receive through the year. On my personal HMRC account the higher figure is shown as my pension income.

A pensioner will receive what they are entitled to as stated in the letter they receive from the Pension service.

You dont enter 52 weeks at one rate on the tax return and that's not what you pay tax on.

 

[Newchodge]

A pensioner will receive what they are entitled to as stated in the letter they receive from the Pension service.

You dont enter 52 weeks at one rate on the tax return and that's not what you pay tax on.

I certainly don't enter 52 weeks at one rate on the tax return, but that is what the DWP notifies to HMRC. The guidance you quoted advises you change the first week's rate, but ignores the 4-weekly payment cycle.

I enter the amount I actually receive in the tax year.

 

[MyAccountantOnline]

I certainly don't enter 52 weeks at one rate on the tax return, ..

..

That's good.

OP hopefully this thread hasnt become too confusing and the guidance link I gave has helped.

 

[Csills73]

Hi All,

I am wondering if anyone could confirm which figure to use on the self assessment tax return for the state pension e.g. for tax year 23-24. Is it the figure on the tax code notice for 23-24 which normally is received in Feb? In this instance received in Feb23.

Many thanks

Thank you very much for all replies, they were very useful, thanks