Martin Lewis has shared an urgent reminder with senior citizens that some may owe HMRC money. Most people will know they get a state pension when they hit a certain age, but you may still be liable for tax.
Taking to X on June 5 to share the reminder, the Money-Saving Expert founder said: “Do you pay tax on the state pension? I’ve been asked this a lot after last night’s [June 4] @ITVdebate so The state pension is, and has always been taxable income.
“The full state pension is currently £11,500/yr – The standard personal allowance (the amount you can earn before you pay income tax) is £12,570/yr
“So if you ONLY get state pension income and nowt else, you won’t be taxed currently. At the last available DWP data of 12.7m people of state pension age in the UK, 8.1m will likely pay income tax as other income took them above the personal allowance. So roughly two thirds of state pensions do already pay tax.”
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State pension kicks in when you hit 66 for both women and men if they’re born after April 5 1960, but kicks in at 67 if you’re born after this and it will eventually rise to 68. But it’s not as simple as just receiving a cash injection.
MyLondon has answered a few questions surrounding the state pension. Find out more below.
What is state pension?
State pension is a regular cash injection from the Government once you hit a certain age. But it’s not one-size-fits-all as people get different amounts depending on their National Insurance contribution history.
It’s not the sole form of retirement income for many either as people may have a workplace pension, savings, and income from investments.
Why is it taxed and how much is paid?
In short, because it is a form of income. However, how much tax you pay depends on your yearly income from all sources.
For example, if you have streams of income from properties or investments then you will inevitably pay more as you are a higher earner. You may earn £12,570 without paying any tax.
What do I do if I think I’m getting the wrong amount?
If you think you’re being paid the wrong amount then it’s essential you sort it out as soon as you can. You do so by contacting the pension service, on the gov.uk website. Find it here.
How do I apply for my state pension?
You don’t just get your state pension, you have to claim it. But to do this you need the date of your most recent marriage, civil partnership or divorce.
You also need the dates of any time spent living or working abroad and your bank or building society details. If you’re applying online, you’ll also need the invitation code from the letter about getting your State Pension.
You can apply online here.
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