Some advice please.

If I defer my state pension what is the income tax situation when I finally draw it out?

Do HMRC assume that it is income earned in that one tax year that I draw it out or would the lump sum be spread over the number of years I deferred it for?

Thank you.

Think carefully about deferment. If you should die before you draw your pension, your spouse won't get it so you will have paid in and got nothing in return.

Think carefully about deferment. If you should die before you draw your pension, your spouse won't get it so you will have paid in and got nothing in return.

Hmmm. hadn't thought about that. The wife has been deferring hers for 4 years now so better get her to draw it out. She will get less than her tax allowance so tax won't be an issue for her.

Hello there.

I could be wrong, but I don't think it's treated as income until you draw the pension and then it's taxed for the relevant tax year. I know people who have deferred theirs and there was no tax to pay during the deferment period.

But you're asking about a lump sum? As far as I know, the State pension only pays an income, not a lump sum. Is there something else as well?

My best, HB

Basically if you defer your pension it accumulates through the year and they add a bit of interest to it. Also they add a bit more to your weekly entitlement too but it's not much. When you finally decide to draw your pension you get all that you haven't drawn over the years (the lump sum) plus your normal weekly amount from then onwards.

Hope that's clear.

treated as Income therefore all your Income is added then if pass your threshold then you are taxed on it, usually from the other Income as I found the State pension is not hit to get the tax out of but other pensions etc have the tax taken out of them.

get your pension and enjoy it while you can.

Do you get a lump sum and an increase in weekly payment when deferring ?

or just one or the other ? cheers

This link should provide the information you’re looking for:

https://www.gov.uk/deferring-state-pension/what-you-may-get

Thanks Lapsed workaholic.