Wasn't warned about this catch.

[Bonefish Blues]

1 in 8 pensioners rely solely on the State Pension, so it not being taxed means an awful lot to them.

 

[SpokeyDokey]

When I reached 65, I decided to carry on working as I was enjoying what I was getting paid for and the extra five years I did would enhance my state pension.
However, after a couple of 'unpaid tax' demands form the HMRC this year, it transpires that my state pension 'extra amount' has put me rather above the personal allowance limit, so now I'm getting charged tax on the extra pension I worked another five years for - !
Apparently it's termed 'fiscal drag' because the persona allowance rate isn't keeping up with the increase in state pension.
I shall be 'phoning HMRC tomorrow to see if there's a way they can alter the tax rate on my pension bit so we both don't have to waste time & effort in making the calculations.

The personal rate allowance has been fixed for a number of years now, and has just fixed it for a further 3 years. It is far from a new news item.

What calculations are you trying to save time on?

 

[ebikeerwidnes]

Being a tax payer is not something to be worried about - it just means that you are contributing to society

 

[wafter]

IRRC the basic rate threshold was frozen from the 2021/2022 tax year and is set to remain this way until 2028.

Between 2021 and 2025 minimum wage has gone up by 37% from the equivalent of around £16,200 to £22,200 (based on a 35hr), the upshot being that, assuming everything above the £12,570 is taxed at around 30% (income tax and NI) the percentage contribution of anyone on minimum wage has nearly doubled from just under 7% of their total earnings to about 13%...

 

[ColinJ]

but you'll be paying very very little in income tax.

True, but it doesn't feel right!

 

[Drago]

Being a tax payer is not something to be worried about - it just means that you are contributing to...

The Treasury.

 

[Aescott]

It's only taxed if it puts you beyond the personal allowance threshhold. All income is totted up, the PA deducted and whatever is left is taxed.

It's also a fallacy that you don't pay tax until you are 16 or 18 or whatever - if your income, at whatever age, exceeds the PA, you will pay.

 

[glasgowcyclist]

Thankfully largest of the two, the injury pension, is tax free,

Is that an ill health pension then, and would that be true for any ill health pension, or only police pensions?

 

[Drago]

Just the police injury pension, or "injury award" as its called.

I was planning to stay, do my 30, maybe a couple more, get my pension the regular way and disappear into the Cursed Earth for the long walk.

However, the then HMIC Tom Winsor was pushing for "unfit" bobbies to be sacked, even those injured on duty, to save money. I don't have full use of my right hand and somewhat limited arm movement following a bad assault that broke me elbow and damaged nerves in my elbow and shoulder. Id been quietly shuffled off to one-off the sub units in CID and was happy enough (albeit it wasn't what I really wanted to be doing) and would have kept at it another few years, but Human Remains were on rhe case and had told me outright I was in their crosshairs for this.

I didnt want to risk getting sacked through no fault of my own thanks to Winsor so I joined the IoDPA and got some proper legal advice and went on an injury pension.

So Winsors attempts (later held in court to be unlawful anyway on the grounds of disability discrimination) to save the government money ended up costing the state several hundred grand more than if they'd simply left me alone. Many hundreds like me in the same boat jumped esrly as a result, meaning that eejut Winsor cos the country tens of millions more than if hed simply butted out and left well alone.

 

[PaulSB]

I only have a tiny private pension (around £600 p.a.) but even that is now enough on top of the state pension to make me a taxpayer again!

Are you sure? The state pension is £11973pa + £600 = £12573. The tax threshold is £12570.

 

[Profpointy]

At risk of getting political, the very people that insist the lowly masses pay tax seem so reluctant to pay it themselves.

If there's one thing the public cant abide in elected representatives is crass hypocrisy.

Thats an observation, not a comment. A question asked and answered.

And while we're scrutinised for every penny, large corporations with telephone number turnovers get to sit down with HMRC and  negotiate how much they pay.

And then theres VAT, a further tax upon income which has already been taxed. Rather than go political ill let you Google to see how we ended up with VAT in the UK.

And with fuel we've paid income tax on the money we use to buy it, and duty, and VAT on the cost of the fuel and the duty - tax upon tax upon a third tax.

So for these reasons and more we resent paying tax.

My late father always moaned about oaying tax. I asked him where did he think the money for his (teacher's) wages and subsequently pension had come from

 

[gbb]

To be fair that is a pretty comfortable retirement if your pension is enough to put you well into the higher tax bracket

While I dont know (and don't want to know) peoples circumstances, dad had a company, state and military pensions. Inevitably, he paid tax on some of it. He was still infinitely better off than someone on only state pension...

 

[ColinJ]

Are you sure? The state pension is £11973pa + £600 = £12573. The tax threshold is £12570.

£12,573 > £12,570!

Actually, the private pension is approximately £600 after the tax has been taken off.

I am not paying much tax and I agree with the statement...

Why does everyone hate paying tax. It pays for hospitals, police, fire, roads...just because you are on a pension doesn't mean you shouldn't contribute to society if you can afford it.

I just think that it is odd that my income is so low that I qualify for housing benefit to help with my rent, but money is then taken back off me!

 

[PaulSB]

£12,573 > £12,570!

Actually, the private pension is approximately £600 after the tax has been taken off.

I am not paying much tax and I agree with the statement...


I just think that it is odd that my income is so low that I qualify for housing benefit to help with my rent, but money is then taken back off me!

Ah, I thought from your comment the private pension was £600 before tax. It's usually expressed as a gross figure. For example I only have state pension but my wife has a state pension plus a pension of £xxxx which is taxable.

Yes, I know £12573 is greater than £12570 but only £3. Thinking your £600 was gross was why I highlighted it.

As for the housing benefit that's how it works. My middle son has Downs syndrome with supported living in the community. He receives a range of benefits from various sources which he then pays back to other agencies!! It is bizarre but after a lifetime of navigating the system I can understand why it is as it is.

 

[DCLane]

Following this as I'm at the point continuing to earn a salary, plus pay into a pension, is putting me at risk of much higher taxes versus taking the pension a lot sooner ... (mine's an education pension).