State Pension and how to record on self assessment tax form

I have received my state pension part way through the year 2022, and get paid monthly but it appears on a 28 day basis. It was back dated by 2 weeks 5 days. How do I calculate how much I have received in the last tax year 22/23, to complete my tax form. The pension service should have sent out details but neither received and I have been told to contact Royal Mail for lost mail! . The pension was increased so my last payment at the old 22/23 rate was on 6 April 23 and the new payment 5 May 23. Should I just calculate my payments up to 6 April 23 and nothing beyond . Can I just add up my payment up to 6 April 23 and submit this.

Hi,
You should calculate the number of weeks up to the end of the tax year and using the weekly rate.
Once you submit the return HMRC systems will calculate the amount and we will adjust the return is necessary.
Thank you.

Can I ask how HMRC's systems deal with the part week during which the pension commences? e.g. under the new state pension, the amount of benefit is apportioned in the week in which the pension starts and for the week of death. This is a change from how the pension was paid for those reaching pension age before April 2016. I ask because the amount pre-populated by HMRC on a friend's return is exactly 1/7 x weekly amount less than their actual new state pension entitlement for the last tax year and their pension started on day 7 of a pension week during the tax year, meaning they were entitled to, and received, 1 day plus 3 weeks in the first 4-week payment schedule.

Hi Gary Coombs,

Please see page TR6 of the notes shown here

How to complete your tax return for Self Assessment

Use these notes to help you fill in your tax return

Thank you.

Thank you. I am aware of those notes but they do not answer the question asked, so I will ask again in a slightly different way. If a person started their UK state pension on, say, 31 October 2022, and received the first payment into their bank on 21 November, amounting to 3 full 4-weekly payments, plus 1 day, representing 31 October, then how is that viewed by HMRC? Do they include only the 3 full weeks on their tax return, or is it the actual amount to which they were entitled (which is also the amount received as payment was within the tax year)? I ask because the amount pre-populated on their tax return is lower than my calculation of the entitlement by exactly 1/7 x £ weekly amount, i.e. the SA system has not counted 31 October 2022. Is there a reason for that?

Hi Gary Coombs,

Under:
EIM75700 - The taxation of pension income: social security pensions,
Subject to the following 2 exemptions, the taxable amount is the amount of pension accruing in the tax year.
This may be different from the amount actually paid in a tax year. 
Thank you. 

Thanks, and again, I am fully aware of that guidance. The trouble is, the figure you are using to pre-populate the return is 1/7 x £weekly pension, i.e. 1 day, less that the accrued amount. Or to put is another way, the entitlement is 22 weeks and 1 day, whereas the return is pre-populated with 22 weeks. When I spoke to your SA colleague, they said they rely on what DWP sends them and it will all come out in the wash from 2023/24 onwards but that simply cannot be the case, especially as no tax will ultimately be payable for 2022/23, whereas that will not be the case for 2023/24, so this small amount of income would be actually taxed if your colleague is correct... DWP thus far have failed to send the promised letter setting out what they consider they provided to HMRC. I get that it is only a small amount but all 3 parties should be able to agree the correct amount and it should be taxable in the correct year, in line with the statute.

@Gary Coombs If you read this it looks like HMRC deal in whole weeks, certainly for the tax year State Pension commences. Which marries up with your experience. I don't believe DWP provide HMRC with an amount as such but for the first year it would be the start date and weekly rate of State Pension awarded. https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76086

Hi, could someone provide a simple explanation of how the state pension income tax is calculated date wise as I have phoned DWP and HMRC and have received conflicting answers. I turned 66 on September 23rd 2022 and received my first part payment of my pension on 30th September and my first full payment on 28th October. I then received a further 5 payments the last of which was on 17th March 2023. I thought the sum of these payments would be my state pension income for 2022-23 for tax purposes. However, I have been advised differently. The DWP say I should include the payment I received on 14th April 2023 in my tax return for 2022-23 as it was paid at the old pension rate before the 2023 uplift to £203.85. Apparently the DWP use different dates for the start and end dates of the tax year. Another DWP person advised I should include the 3 weeks accrued (but unpaid) pension up to April 5th 2023 in my return for 2022/23. Can anyone advise which on the above scenarios is correct

This is quite similar to my question. The tax law requires that your are taxed on the amount of state pension to which you were "entitled" during the tax year. The state pension is a weekly benefit, paid in arrears, with entitlement arising when each weekly amount would be payable, if you were paid weekly. With 4-weekly payments, the weekly entitlement does not change - only the frequency of payment changes. Your first payment, on 30 September, was 1 day's entitlement for 23 September (commencement and cessation of the pension are the only times entitlement is apportioned to days - something introduced, I believe, with the new state pension in 2016), plus a full week. After that, you are on the 4-weely rhythm. I therefore believe DWP has given you incorrect advice on both occasions. My understanding is that your entitlement in 2022/23 is everything you received up-to and including that 17 March payment, plus the number of full benefit weeks ending on, or before, 5 April, representing the accrued entitlement that was included in the 14 April payment. In my view, that is 2 weeks, of the 4 weeks included in that payment, i.e. week ending 24 March and week ending 31 March. The other 2 weeks end in 2023/24. The issue involved in my question, is why does HMRC appear not to include the amounts relating the firs 1 to 6 days included in your first payment when they pre-populate the tax return amount.

I have been told by the DWP, that I needed to add up all weeks from my 66 th birthday in 2022 until 10 April and multiple that by the payment that they give me on a weekly basis. . This was the amount that the HMRC had already inputted onto my tax form. I even spoke to a manager at DWP just to clarify this, as this was NOT the amount I had actually received by about 2 or 3 weeks. However they insisted that this was right and as the HMRC had also inputted this figure I assumed that they knew best, but still disagree. I am not sure when I will get the extra tax back for this 2 to 3 weeks of money I have not received but paid tax on. They kept saying it was backdated.

Hi imlach03,
The HMRC figure will be based on your entitlement up to and including 05/04/2023.
Once the tax return has been processed you can contact our helpline and we can confirm if the amount you declared matches the figure the system generated: 
Self Assessment: general enquiries
Thank you. 

 

Thanks but we are just going round in circles with this. I know the amount is supposed to be based on the entitlement but in my view the amount pre-populated is incorrect, i.e. too low. My question is, how does HMRC calculate the entitlement in the first year when the first payment includes an apportioned week plus a number of full weeks, and the rest of the year includes, of course, a number of full weeks ending on or before 5 April? It seems to me that the part week is not being taken into account but I am getting no joy out of your self-assessment colleagues, DWP or you at the moment, which is frustrating.

Thank you HMRC Admin 25 for your prompt reply. However I am still confused I'm afraid. You have written: "The HMRC figure will be based on your entitlement up to and including 05/04/2023." As I wrote above, my last pension payment in tax year 2022/23 was on March 11th,2023. Do you mean that I will be taxed on my entitlement between 12th March and 5th April in tax year 2022/23 even though I did not receive payment of this entitlement until April 11th ie: in tax year 2023/24? This seems at odds to the way monthly salaries are taxed ie when someone works in April, the hours worked in April are typically paid at the end of April . The pay will include days worked before and after 5th April and are included in the calculations for the new tax year. I am currently PAYE. I have a part time job and an employer's pension. I have spoken to HMRC and DWP on a number of occasions to try and resolve this issue. HMRC have said they cannot change the pension paid figure as DWP feed the figure directly into the HMRC computer. At my request DWP have sent me a BR735 which shows a third figure based on my pension from 23 September 2022 to 11th April 2023. Apparently this later date is used as my pension uplift commenced on 12th April 2023. DWP also told me that the tax year dates they use are based on when the uplift in pension starts and not the HMRC tax year dates. Could you provide more clarification please. Thank you.

PS Some of the dates in this latest post are slightly different to those used in my initial post. The later figures are correct. Apologies.

imlach03 The tax rules are indeed that you are taxed on your entitlement for 2022/23, even though you may not receive some of that amount until after the end of the tax year - it is simply what the law says. My understanding is that you become entitled to an amount of state pension on the day on which a week would be due for payment if you were receiving it weekly (as opposed to 4-weekly). This is why you need to apportion a 4-weekly DWP payment to work out your income for tax purposes - how many weeks of the 4-weeks' payment end in one tax year and how many in the next. Any entitlement taxed in 2022/23 will of course not be taxed again in 2023/24, so it is just a timing issue. DWP works on a completely different basis. The state pension is a weekly benefit, and the annual uplift applies for your first week that starts after the statutory date on which the pension increases. That is the first Monday of the new tax year. For 2023/24 that was Monday 10 April, so, if you were paid on 11 April, that payment will have included 4 weeks at the 2022/23 rate. Your next payment on 9 May (if I have my dates right), would then be 4 weeks at the 2023/24 rate. So, the DWP year and the HMRC year are different and in my experience, DWP are not giving accurate information when they try to explain the tax position, which, frankly, in my opinion, they are not equipped to do.

Hi Gary Coombs,
If the payment is for part week, this will be reflect in the Self Assessment amount.
Thank you. 

 

Hi Admin 25, Thanks and that is what I would expect but that is NOT what the pre-populated amount on the SA return shows! Back to the example (which is based on real data): * State pension starts 31 October 2022 and weekly amount is £185.15. * First payment, for 31 October plus 3 x 4-weekly amounts ( 1/7 x £185.15, plus 3 x £185.15 = £581.90) paid on 21 November. * 4 x 4-weekly payments on 19/12/22, 16/1, 13/2, and 13/3/23 totalling 4 x £740.60 = £2,962.40 follow. * 1 x 4-weekly payment on 10 April 2023 of £740.60, of which 3 weeks ( w/e 20 March, 27 March and 3 April) fall in 2022/23, meaning accrued amount is 3 x £185.15 = £555.45 My understanding is that the entitlement is £581.90 + £2,962.40 + £555.45 = £4.099.75. However, the return is pre-populated with on £4,073. The difference is exactly 1/7 x £185.15 = £26.75, which surely can only represent the 1 day for 31 October included in the 21 November payment. In my, and their, opinion, the pre-populated figure is therefore incorrect. The person is content to override the pre-populated amount but does not want to do so until it is clear that that is appropriate. It has so far taken since 6 April to get absolutely nowhere, with either HMRC or DWP by phone - not helped by the fact that you close the SA helpline over the summer! It is not the amount of tax as such, albeit, the £26.75 will not suffer tax in 2022/23 but would suffer tax if assessed in 2023/24 because of overall income levels: it is that they want to get things clear and on the correct footing for 2022/23 and all future years. Can you please confirm that the numbers in the example would give and entitlement of £4,099.75 and explain why the pre-populated amount is therefore incorrect? Thanks

@Gary Coombs Are you sure this isn't answered here i.e. part weeks are ignored in the (tax) year State Pension commences? https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76086

Thanks for posting the link again but as I read that guidance, it is about how the tax code is generated for PAYE, not how the SA return is pre-populated. PAYE is a system to get a reasonable estimate of a person's tax position, with an end-of-year reconciliation to sort out any differences. The SA return, on the other hand, is an absolute statement of a person's final tax position for the year in question. Pre-populating the pension with an incorrect entitlement seems the same to me as pre-populating it with the incorrect amount of bank interest when all accounts have been properly included. Perhaps there is guidance tucked away somewhere on HMRC's part of GOV UK that sets out how this pre-population is done and that it is expected that in year 1 of the state pension the customer must override the pre-populated amount? I await HMRC's response to my question...