Well OT - The apprentice has feally f****d it up this time

[michael adams]

You also have to tell them if you change your bank account or move house, I believe. The bastards! They won't even send letters to the wrong house or pay money into the wrong bank account any more !.

By definition almoset, the State Pension, would always be less than an individual's Personal Allownace. If not there'd be something wrong somewhere. Given which it can't possibly be taxable. What is taxable however, is any income in addition to the State Pension, private or occupational pensions etc which exceed the personal allowance. And it's on these that income tax is payable.

And quite possibly like many of your kind leaving a trail of misery and mis-selling in your wake.

michael adams

...

[charles]

It is taxable - or it's added to all your income before the personal allowance is taken off. You certainly have to declare it on your tax return.

If, like me you receive a pension from an employer, your personal allowance is already allowed for in your tax code. This means that the state pension is taxed at standard rate.

[Bob Eager]

ITYM 'pension is already allowed for'. That's how it works - they knock the state pension off your personal allowance and give you a low tax code.

[michael adams]

Indeed. I never claimed that you didn't.

What's taxed at the standard rate is any income you recieve in excess of the personal allowance.

A person whose only income is State Pension does not have to pay Income Tax. They only pay income tax on that portion of their income which exceeds the personal allowance. Which by definition is income in excess of the State pension.

Howver I'm always willing to stand corrected. If you're saying that tax is in fact deducted from your State Pension, and that a coding notice is sent to you by the DoP explaining how much has been deducted, and that in addition another coding notice is sent to you from your former employer explaining how much they in their turn have also deducted then fair enough.

It seems a rather inefficient way to be doing things as it would seem simpler to be collecting tax from the feewst number of sources, but there you go I suppose.

michael adams

...

[Tim Streater]

Sure its taxable.

In my case I have other pension sources than the state pension. It's all just added together (including OAP) as gross income on my tax return and then the personal allowance deducted and then the remainder gets taxed at whatever rates apply. I ignore all these coding notices since I've never understood what they are supposed to be telling me. Nothing is deducted at source which is AFAICT where all the complication comes in. The UK system is overly complex and hard to understand; I found the US system a lot easier and I could do my own tax return there in about an hour.

[michael adams]

The point I'm making is that AFAIAA anyway State Pension is never deducted at source. As it will never exceed your personal allowance State Pension is always paid in full - and so isn't taxed. Any Income Tax due if deducted at source will be deducted from a second pension or similar.

That's all I meant really. Technically I suppose the Inland Revenue could choose to regard the first ?11,000 of an individuals occupational pension

-if applicable, as fulfilling their personal allowance, and tax their State Pension at standard rate instead. But that would be totally impractical and would simply create work. Given that most people are in receipt of State Pension, and if that is paid in full, it won't exceed their personal allowance.

So that while in aggregate with all other income its taxable; and in theory as above it could be taxed at source, in practice it isn't.

I wish I hadn't mentioned tax at all now. Just as I'm sure I should be able to explain this in two sentences.

michael adams

...

[charles]

Yes, you ignore the coding notice, but a copy will go to your pension provider who takes off tax before he gives you the pension. It's called Pay as Your Earn". If you are self employed you have to ensure that you've left enough money to pay the taxman at the end of the year.

[michael adams]

So the only party to deduct Income Tax at source is your pension provider who will deduct the appropriate amount from your occupational pension. While you are paid your State Pension in full at whatever is the applicable rate.

In fact if you qualify, the only way you could be paid less than the applicable rate of State Pension every month might be if you owed serious money to the taxman. Maybe. I'm not sure whether they're actually allowed to starve you to death or not.

michael adams

...

[bert]

It was never referred to as a benefit until quite recently.

SO how does that affect the definition as a right or a benefit.

But you are still entitled to state pension as it is a right.

Grateful for what - the bit of luck that also played a part.

That is the constant dilemma for governments. We can't afford universal benefits but on the other hand if you means test you punish those who have saved. Classic case currently is in residential care. Those who can afford to pay are not only paying for themselves they are subsidising those whose fees are paid by the local council

[bert]

In article , charles writes

The state pension is not taxed at source. It is deducted from your personal allowance and then the remainder is used to calculate your tax code which is then passed on to your pension provider. If you have more than one pension provider your second will be given tax code BR assuming your first provider has used up the remainder of your personal allowance.

[Tim Streater]

Not in my case at the mo. Apart from the OAP, all my pension income is from overseas. So I have to submit a self-assessment each year. The notion of some of it being deducted at source just creates work, anyway.

[Tim Streater]

I've never heard of it being deducted from OAP.

[Dave Plowman (News)]

As is any private pension. Do you consider those benefits too?

[News]

In message , michael adams writes

Michael, I'm glad you mentioned taxes. Interesting. I did not realise that once the state pension is payable it effectively becomes the first tranche of income, and is always paid free of tax.

Although I'm effectively retired, I'm still self employed, so prepare accounts showing my income, yet my (non) state pensions are taxed as PAYE. Standard practice, I'm told, even for the self employed. I have several small pensions, the total of which take me just over the personal allowance, so they are a mixture of tax deducted, no tax deducted and partial tax deducted. Presumably, when my state pension is added next year, that will change the way some of them are paid.

[michael adams]

For an educated person such as yourself maybe. But given AFAIAA anyway its mandatoryit does make you wonder quite how some less well-educated poor people make out, never mind the criminal low lifes as portrayed in a lot of TV dramas at least.

Then there's the sales tax. Many US States impose sales tax at different rates. For sellers they deduct this tax at source for any buyers living in that State which is why Amazon located in Seattle in relatively sparsely populated Washington State. (Gates just happened to be born there) However for out of State sales to places like NY buyers were supposed to voluntarily declare the sales tax and pay it - not sure of the mechanism.

Well basically a lot of them don't. Which was the first big fuss with Amazon over tax in the US. There were calls for them to deduct sales tax at source for out of state sales as well; for places like NY which have high populations and thus were losing millions. However as different States have different rates this meant having to deduct different rates from every sale and declaring and remitting to the different State Treasuries. And people think VAT is bad. Which is why the bid failed; so far at least.

But that's not all. Individuals who do pay the sales tax along with many other local taxes are allowed to deduct those on their Income Tax declaration.

Then there's gambling. Over a certain lowish limit everyone is supposed to declare any winnings from legitimate gambling on their tax return. Although they're also allowed to deduct any losses. At some racetracks in the US for certain and maybe it applies in casinos, if you win above a certain amount on the Tote you need to fill out a form including proof of ID before they pay out. so as to make sure you declare it on your Income Tax.

Poor old Al Capone never really stood a chance.

michael adams

...

[Tim Streater]

Well, if you didn't have any deductions you could use the EZ form, a single sheet with both sides to fill in. You'd put in your salary and PAYE information supplied by the employer, and that would be about it. People who might have had simpler financial lives and who were renting, say, would use that.

For anyone with deductions, the standard form was needed. Start with salary and then take off deductions - PAYE already paid, any interest payments incl. mortgage, charitable donations, hmmm, I forget now but there must have been other deductables also. Oh, and add any interest or dividend or rental income too - none had tax deducted at source, so it was quite straightforward. I bought a car once and I think I could deduct state sales tax on that, too. That gave a net amount and then just look it up in the tax tables.

There was the state income tax form too. Then the tax you paid the US gumment was a deduction for *that* form, so you weren't taxed twice.

[whisky-dave]

People see what they want to see.

No. They can come here get a job and pay for living in the UK the same way I do . But I don;t see how they can if they have given all their money to traficer s for the dingy they rented. So I agree with taking them from the caps rather than the beaches. I dont; understand how a syrian family can afford ot live in the UK let alo ne london, were one bed flats are 300K+ . yes sure take them to Barnsley for the free months rent but I don't underst and how they can afford it.

Yes sure they do, you see how this works on the TV, arranged marriages and the like. And with so called extended families..... If you say there are just 1000 syrians in the UK how many friends and famil y will they have ?

No more so than I am happy for UK residents to do it. My old school is now flats being brought or rented. If a syrian has the 350 K for a 1 bedroom flat they they can have it or my brother can or anyone el se, whoever has the money can have the property whether they leave it empty or not is up to them. What I would object to is someone using it to house 2+ families or to rent ing it illegaly or by those breaking what I'd call serious laws. If you don;t know what they are then for me a serious law being broken woul d be using the flat for child sex or distilling alochol, or running a DVD d uplicating scam, rathe r than parking on a yellow line, or swerving to avo id hittign a cat/dog in a bus lane. I do not care what skin colour they have or their religious beliefs, but I equaly don;t want to be told that I can;t report them for kiddy fiddling be cause of their culture or that they are a famous DJ.

[michael adams]

So there were in fact two income tax forms to fill in.

Which presumably were sent in at around the same time, so as to make reconciliation easier across the two forms as people filled them in.

I'm just wondering how much checking up they did and how many staff they needed to employ for all this. Presumably there was some sort of co-ordination between the individual State Treasuries and the Federal Treasury to ensure that the figures people gave on these two different returns matched up. Which I would imagine could be subject to a lot of honest, and time consuming mistakes.

Either that or the whole system relies to a large extent on people's honesty. The point being that in the UK for anyone on PAYE, which is probably a fair majority, all the taxes they have to pay, Income Tax, interest on savings, VAT, betting levy if applicable is all deducted at source and doen't require any declaration on their part at all. So honesty simply doesn't come into it as such sources of income are under an obligation to declare payments to the taxman themselves. Allowing the hard pressed taxman to concentrate all their efforts on the self employed - that and cooking up sweetheart deals with large corporates

michael adams

...

[Tim Streater]

Indeed. They were sent around at more or less the same time, and then one waited for any slips from one's employer, banks, etc, and gathered together any evidence of large purchases, mortgage info, in case they wanted to audit you (I never was, so I dunno what that would have been like). After then, I usually set aside an evening to do the work.

Yep.

Good question. I think it all became automated during my time there, but I could be wrong, it was a long time ago. So each form was data-entered and then I assume automatic cross-checking took place, and then the software looked for particular patterns which might raise alarms, and after that some number of people were selected at random for an audit.

Well it's an interesting point. I agree it simplifies it for the majority, but once you step outside that, the forms can become complex. If tax is deducted at source, you have to gross the figure up before it can be put in the tax return, and then the actual tax paid put in too.

Yerrsss, well.

[Dave Plowman (News)]

Your OAP is paid into your bank as is. If you have any other income, it is simply added to that in the normal way as regards income tax.

When your tax affairs become simple - ie just regular pension income only, you don't normally need to do a return each year.