Latest Moan From You and Me 2025

So is 35k income the criteria now as to whether you qualify for the WFP, (sorry Shiney), I did that on purpose,,
Why dont they just bung the pittance on the pension and then scrap the idea.

 

Spoke too soon as OH has received notification of his WFP. Presumably putting it on pensions would maybe bring more people within the £12 k tax bracket ? Hmmm - surprised they haven't jumped on that idea by now.

 

They seem to be calling pensions a benefit these days.

Are they really going to start taxing benefits, any government that does that has to be nuts, just the cost of doing it cannot really be worth it, it will cost more than it saves, surely.

 

Last year i had to start paying tax up front so had to pay twice the amount and now because my interest fell they now have to repay the extre tax back!!!!
But they get a free loan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! for the year

 

I suppose it depends on the benefits that they tax if someone gets more than the tax free allowance then they should pay tax same as someone working, I've got a family member who gets roughly £3000 a month tax free but if he works he'd pay tax

 

The State Pension has always counted towards taxable income. It's just that historically the pension amount was a lot less than the tax threshold. Pension has increased each year, but the tax thresholds haven't increased since 2021.

 

I can understand if your benefit goes over the tax threshold you pay tax.
Just seems stupid not to work out the tax and deduct it from the benefit before paying it.
But I suppose different government departments don't actually talk to one another.

 

@pete. It's over 10 years since I worked for DWP and things may well have changed. Income Related benefits e.g. Universal Credit, Income Support weren't included in taxable income which makes things more difficult, but not impossible.
The simplest method is for HMRC to determine what is or is not taxable, in the same way income is. PAYE then takes care of everything.
You are correct though, different Government departments don't always talk to each other. At times even parts of the same department don't talk to each other. For example, when somebody moved from one benefit to another supporting income, there was no automatic way to get the old benefit closed. E-mail was the main route and then potentially wait days to be informed that it had been closed, with the claimant constantly calling to ask what's going on.

 

HMRC/DWP don't operate payrolls, so if your state pension becomes taxable they will send you a letter telling you how to pay the tax you owe. If you have another pension provider paying you a pension then they would be expected to collect the tax you owe on the state pension. It's all done in your tax code.

 

I've got a few shares and usually get a tax bill from HMRC on the dividends, not had any dividends recently, for various reasons, but I'm expecting a bill at some point.

My private pension provider stops tax before paying me.
Which is why I say if the government pension goes over the tax threshold why shouldn't the government be stopping the tax before paying it out like they expect others to do.

 

@pete, I misunderstood what you meant about Government taking the tax before payment. If/when pensions/taxable benefits exceed the tax threshold I presume they will have to. If not, everybody will receive a bill from HMRC every year. HMRC can't cope with the work they have, so just imagine the carnage if they had to cope with every pensioner as well.

 

I thought I read somewhere HMRC can't take money from DWP payments, which is why they take any tax owed from other pensions, if you have these.

Once state pensions exceed the personal allowance, that will create a problem where that is a person's only pension source.

 

As well as the PSA of £1,000 there is also the starting rate band for savings of £5,000. It is tapered if you have other income in excess of the personal allowance. So you could have interest of £6,000 and not pay tax on it. There is also a dividend allowance of £500.