The law is clear that the state pension is taxable on the amount to which the person is entitled during the tax year (ITEPA 2003/S578) but HMRC guidance on what that means is confused because every few years a 53-week year crops up.
My understanding is that the state pension is a weekly benefit, paid weekly, or 4-weekly, etc in arrears. To calculate the amount to which one is entitled, if paid weekly, one would look at the number of payments received in the tax year and add them together. That could be 52 or 53, with 1 week at the rate for the previous year and the other 51 or 52 weeks at the rate for the year. The tax code is likely to reflect only 51/1 split as I understand things.
However, if payment s 4-weekly it is a little more complicated.
If the first payment in the year was, say, on 10 April 2023, then it would include 3 weeks relating to entitlement in 2022/23 and 1 week at the 2022/23 rate relating to entitlement for the 2023/24 tax year. There would then follow 12 4-weekly payments at the 2023/24 rate, taking the person to the payment received on 11 March 2024. The next payment on 8 April 2024 would include 3 weeks entitlement in tax year 2023/24 at the rate for that year. The taxable amount would be 1 week at £185.15 plus (48+3) weeks at £203.85, making £10581.50. So far, so good.
But what if the person receives their first payment on 6 April 2023. Again, that would include 1 week's entitlement at the 2022/23 rate of £185.15 relating to tax year 2023/24. There would then follow 13, 4-weekly payments, with the final payment being on 5 April 2024. The entitlement would therefore be 1 week at £185.15 plus 52 weeks at £203.85, making £10,785.35. Would this then be the amount to enter on the SA return, or, if the person was not in SA and had received a tax code, coding out £10,581.50, would they later receive a coding change or a Simple Assessment to recover the missing tax?
Your guidance is not clear - neither the SA return note, nor EIM76005. Or have I missed the crucial piece of guidance?
Can you please clarify, because each of us faces this conundrum every 6 years or so.