Pensions and tax

[Life-Goes-On]

Sorry if in wrong forum, please move if so, thanks.

 

I'm just sorting out my parents finances (70 &69), as they not been getting everything they should.

(I'm still waiting for all info from them)

 

First Q

 

My dad gets a state pension I believe £102.15PW (Mum gets £78.86PW)

Dad also gets a small private one of £1600 PA

 

He has always paid tax on the private one, quite a bit at first, but hardly anything these days.

 

Is it right he should pay tax on it?

 

 

Cheers

[honeybee13]

Hello there. I haven't checked this out, but would have thought it would be on the HMRC website.

 

Pensions are subject to income tax, whether they're from the State or a private one.

 

Last time I looked, the Personal Allowance was offset against the State one first, so it was all or nearly all untaxed, then any balance of the allowance was applied to the private pension.

 

But to answer your actual question, yes if he earns enough, he should be paying tax.

 

If I have time later, I'll check out the figures, but does that help at all?

 

My best, HB

[firstship]

Hi Life,there is a common misconception that you dont pay tax on pensions,

 

Lets take your dad ,state pension £5311.80,private pension £1600.Total £6911.80,tax allowance £9900 so should not be paying any tax at all

Your mums state pension £4100.72,tax allowance £9900 so no tax applicable

 

If these are the total incomes,you need to be looking at benefits such as Pensions Credits for starters

 

Go online to pensions credits,there is a benefits calculator you can fill in to see what they should be getting as an additional payments.

 

Other factors are such things as do they own their own property,or rent?

 

Should also be able to claim help with council tax,if they rent then also help with the rent

 

Get all the figures from your parents then make an appointment with the Pensions Specialist at the local Citizens Advice or with all the information I can help you.

 

Regards FS

[Life-Goes-On]

Hi First

 

Once I get all info (savings etc) I will be getting them to claim PC, so then won't have to pay CT.

I have just found out how bad they have been in not claiming what they should have.

 

Been on to the benefit calculator and with CT they should be about £60PW better off.

 

 

But it's the tax issue I don't understand as I am surprised they are paying tax on that amount.

 

Also if it is wrong, how far back could they claim?

[firstship]

I am surprised your dad is paying tax,you need to contact his tax office.

 

Download P50 online fill it in and send it to the tax office (sorry P50 is to claim overpaid tax back) I think you can claim back up to 7 years of overpayment.

 

I think what is happening as your dad has a private pension the pension provider is deducting tax at source,which means they have the incorrect tax code,so his tax office must produce a new tax code to stop the pension provider deducting tax at source.

 

Regards FS

[Nystagmite]

Do you know what their tax code is? BR means no personal allowance and all pension is taxed at 20%

[Life-Goes-On]

Do you know what their tax code is? BR means no personal allowance and all pension is taxed at 20%

 

No I don't

I read that he has 5 years 8 months from end of the tax year to apply for incorrectly paid taxes.

As we live miles apart, decided to wait and sort the tax issue of when we can both sit down together and go though all the paperwork.

Hopefully he has kept the last 5 years info.

 

But will be sorting the other issues PC, CTB ASAP as I believe they can't be backdated (Please someone let me know if they can)

[firstship]

Hi,the PC and CTB at the moment can be backdated for 12 months from the date of the claim.

Next year you will be unable to backdate as Government Legislation will be in place to stop backdated claims

 

Regards FS

[Life-Goes-On]

Great, thanks

 

Just looked at it changes on 6th Oct, but will be doing it next week.

So they should get £3k from it being backdated.

[Nystagmite]

They'd need good reason for it to be backdated. Ignorance of the law isn't one of them.

[firstship]

I think Life_Goes-On and myself have had a good read online and PC at present can be claimed back for up to 12 months,without a good reason,as long as you qualify.

 

CT Benefit.some councils are restricting the backdate claim to 6 months,my local council even asked if I would like to claim for backdated payments to February 2011 ,made my CT claim the begining of June 2011 so this information is very current

 

Regards FS

[Life-Goes-On]

Update.

 

The rules have already changed you can only backdate a claim for 3 months now not a year.

 

My parents have too much saving to get Pension credits, so no help with council tax.

They will get an extra £25 PW form Savings Credit.

 

In the next 6 months or so their savings will drop so they will get about a £1 PW PC, so that will mean they won't have to pay CT.

 

Thanks for all the help