State Pension and Self Assessment

As I receive a pension from overseas, I use Self Assessment to declare my revenues. I have recently qualified for a UK state pension but am not sure whether the amounts I receive have already had UK come tax deducted. Probably not but I'm having difficulty finding an answer. Can anyone assist? TIA.

Hi,

Tax is not deducted at source on your State Pension so it is the full amount received that you need to declare

Thank you.

HMRC Admin 28, I think you meant to say that the UK state pension must be reported based on the full amount to which the person is entitled, not the amount they actually received in the tax year.

Thanks!

Hi Gary Coombs,

That is correct the entitlement figure is used rather than the actual amount received during the tax year.

Thank you.

Now I'm confused - what is the "entitlement figure"?

Hi Peter Kennedy,

Your entitlement is usually the amount that is shown on the letter you receive from the DWP advising of the new rate.

Thank you. 



 

The letter is not particularly helpful as it says only that the new weekly amount is £X. That still leaves everyone scratching their heads over how to calculate the annual amount to which they are entitled, as opposed to how much goes into the bank, given that their April payment will always include 1, 2 or 3 weeks at the old rate and the remainder at the new rate. It would be so easy for DWP to amend its systems to include on that letter what the person's annual entitlement will be given that they know from which payment the new rate will apply.

I'm still confused. I'm paid monthly. Should I simply declare this amount x the number of months? TIA

My state pension is paid every fourth Friday, in arrears. For the year ended 5 April 2023, I actually received 1 week's pension less than there were Fridays in the year. So, if I was entitled to 53 weeks (i.e. Fridays) payments of pension, but only actually received 52 weeks, do I report the 53 weeks worth of pension? I realise the position will reverse, but then possibly re-occur, for the year ending 5 April 2024 and subsequent years.

Hi Harvey Sz,

Please report the payments paid.
You can change the pre-populated amount recorded on your Self Asssement tax rerurn if the amount paid differs. 

Thank you. 

Hi, I am getting state pension form UK and state pension from overseas . Do I have to file self assessment and declare state pension from overseas as an foreign income, please? Thanks

Hi Katarzyna Hanulk,

This would depend on the country you receive your state pension from, some countries tax their state pension, such as Germany, meaning it is not taxable in the UK.  
You would need to check the appropriate double taxtion agreement.  Where there is not double taxation agreement with the UK, the pension would be taxable in both the UK and the country it is derived from.
Please see Tax treaties

Thank you
 

Please could you post a link to the regulations or published information that explains how UK pension is taxed by entitlement rather than amount received. I agree with the suggestion to put the taxable amount for the year in the letter that notifies you of the next year's rate.

HMRC Admin 25's response to my post was contradictory to HMRC Admin 32's response to Gary Coombs's post, so I was left unsure. HMRC Admin 32's response itself was contradictory to HMRC Admin 28's response to Peter Kennedy's post. For my 2022/2023 tax calculation, HMRC used the state pension "received" amount; the "receivable" or "entitled" amount would have been one week's pension more. I suspect the regulatory strictly correct position is for the "receivable" or "entitled" amount to be the taxable amount (thus agreeing with HMRC Admin 32's position) but that the Department for Work and Pensions reports the "received" amount to HMRC which then proceeds to use this, as an administrative relaxation, in tax calculations. Would someone from HMRC care to refute this suggestion?

Hi Richard Storer,

The figure for UK pension applied in a Self Assessment return comes automatically from the DWP. If the actual figure received is different, you can update your Self Assessment return to show the correct figure.

Thank you.

 

Hi Harvey S,
The figure for UK pension applied in a Self Assessment return comes automatically from the DWP.
If the actual figure received is different, you can update your Self Assessment return to show the correct figure.
Thank you. 

Hi Richard Storer, The legislation you asked for is S578 Income Tax (Earnings and Pensions) Act 2003, which states, "If section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid." The State Pension is listed in S577, so S578 is applicable. Hope this helps.

Regarding the comments above by HMRC Admin 19 and 25. As HMRC appears to calculate the annual tax due based upon thirteen payments of the same value from DWP there is going to be an overpayment of tax because only twelve payments of the same value are always received. For those who do not have complete a Self Assessment return surely there should be an easier way to correct this problem.

Responding to Sidwell's comment above (and just also a general query). I get my State Pension paid monthly. Every year, in the calculation of tax due versus tax paid, HMRC calculate my State Pension to be the weekly amount (notified in the letter received from the Dept for Works & Pensions each March) multiplied by 52. This is of course an overestimate since some of the April payment is at the previous year's rate. I always therefore, every year, actually receive less State Pension than I am taxed on. Yes, I could correct the taxable amount each year in the Self Assessment Form but my query is what about those who never complete such a form - maybe don't even know such a thing exists. Or do know, but don't go through their bank statements tallying up State Pension payments, so don't know the amount included in their Tax Code is wrong. Am I right in thinking that this is a clear bias or glitch where HMRC is consistently (it never goes the other way) collecting more tax than due. Surely this should never have been allowed to happen in the first place. If I'm wrong, please tell me.