To be annoyed pensioners effectively now get a bigger personal allowance

[FlightBeforeXmas]

So because of the fiscal drag from not increasing personal allowances the chancellor has announced basic state pension will not be taxable.
So if you earn this amount you pay tax on it despite having the extra costs of working.
Pensioners are also much more like to own their homes.
How on earth does this make any sense?

Oilofeveningprimrose

Worth remembering we won't get to retire anywhere near as early as you have because they slept on that and should have had a later retirement age introduced a long time ago.

I know a lot of pensioners who would have lived to have kept on working. My dad actually went looking for loopholes so he could stay on in his job as he loved it and deep down knew he would find it difficult to live on his pension.

Really yawn!

Exactly. Retirement is usually the time when savings are spent, rather than accumulated. We spend our working lives saving in order to fund our retirement - or at least that's the theory anyway.

Future generations are likely to be a lot less fortunate than ours. The problem is that a great many working-age people nowadays are finding it almost impossible to save enough (or, for the least fortunate, to save anything at all).

So a person on the state pension which exceeds the personal allowance will not pay tax, but the person on the state pension plus a small private or work pension which takes them over the threshold pays tax? How is that fair? There will be ructions about that!

Grossly unfair. Many have a small additional pension which would take them over the threshold, and the total income may be less than those solely on the state pension, yet they will still pay income tax.

I’m saying this for information not judgement, pensioners used to get an increase on their tax free allowance to ensure they weren’t taxed purely on their state pension. I’m not sure but I think it was George Osborne who removed it so it’s not a new thing

There won’t. I’ve paid tax on my occupational pensions ever since I claimed the state pension. I don’t in the least object to the poor buggers who exist only on the state pension not paying tax, we’re probably talking a couple of quid each, not enough to buy them a cup of coffee. No ructions here.

You really don't understand it. The ONLY pensioners who will benefit from not paying £5 per month in tax are those who are ONLY in receipt of the state pension. Anyone who has additional income from any ther source (interest on savings, other pension etc) will pay tax as normal on everything above the personal allowance.

Those who receive only state pension is equivalent to less than 19 hours on minimum wage.

Stocks and shares are usually a long term investment for the best returns. Best for things like pensions. Pensioners don’t have that long to see the best returns

It is but it would involve all pensioners doing a self assessment if they have no other taxable income. These would have to be processed and bills sent out. It’s not worth the admin costs for the piddly amount they’d collect. Probably about £70 per year in 2027

But I on the state pension, plus small additional pension may be getting less than someone getting only the state pension, yet still paying tax on the amount above the threshold.

You will never be getting less in total. You may be getting £60 less of your state pension, per annum, but that is only because you have other resources and you therefore do not qualify for this £60 'benefit'

Start counting your tax from your state pension:
You get full state pension
Your neighbour gets full state pension.
All taxation is on top of that.

Your neighbour has no other income at all and therefore is exempt from about £60 tax per year.

You have a small pension of £20 per month and might pay tax on everything above the personal allowance. You are still going to have £130 pa more than she does.

Or you might have a 'small' pension of £500 per month. You are going to have maybe £4,740 more pa than she does.

If your pension is £20 per month the differential is much greater than if your pension is £500 per month. But that is always the same on any benefit cap. The closer you are to it the bigger the differential.

The fact is, they don't have a mechanism to tax the state pension if that's all you get. I have a small occupational pension as well as the state pension. So they tax my tiny little occupational pension by reducing my tax code. They are presenting this as some sort of kindness towards pensioners. The reality is if they don't have additional income, they have got no mechanism to tax them, so they are presenting this as some sort of government largesse.

I am late 60s. I go to the gym 4 times a week, swim, jog, and cycle. I go to art galleries and the odd football match. I have time to bake, brew beer, and I am learning French. I love being an OAP. No walking sticks yet. No appraisals, I get up when I want. I love it. My parents both lived into their 90s, so I could have another 25 - 30 years of this ahead of me.

A mechanism could easily be produced - deduct at source and make net payments. Job done.

The fact is the optics of it is horrendous. To say that everyone else at that income level will be taxed except pensioners. Even if the amount raised is pretty much completely wiped out by the administration costs they should still take it. Rules like this, particularly when stuck with the triple lock just feed intergenerational resentment. It IS special treatment.

Pensioners WILL be taxed. At the same rate as those still working. There may, in a few years, be a VERY small amount that is excluded, but it’s minimal.

Save your ire for the government, not the pensioners. The freezing of tax thresholds is one thing that is dragging EVERYONE, pensioners and workers alike, into this “argument”.

I am around 15 years away from retirement age, many threads on here sadden me at the constant bashing of those in their retirement years.

My ire IS at the government. I'm not blaming the pensioners for this. Im pointing out it breeds resentment. Im 20 years from retiring myself (unless they change the goalposts again)

@Whistonia Steelworkers earned more than the average wage in the 1970’’s. The unions at the start of that decade were very powerful and could negotiate. better wages in that industry.

What is apparent is how people just do not understand tax, pensions and financial products generally.

Some people on here just want to be angry and they have selected the older generation as a target for that anger. Despite very clear explanations in this thread answering the non sensible title, they continue to be angry. You can’t reason with people sometimes.

This has probably been done because it saves old people, who are on a very low income anyway, some of which may have dementia or not be computer literate doing an assessment. If I had parents who were in this situation I would be glad it wasn't being taxed because I would probably be the one that would have to sort it out each year, a lot of bother for very little tax outcome. They will no doubt sort out some mechanism in time so the tax can easily be collected like PAYE

People like me then? There’s an assumption that we all get the same in state pensions. However many older women have gaps in their contributions, there were no NI credits for being a SAHM when I was a young mum. I also, like many others paid reduced rate NI, because of low, part time incomes.

I don’t get a full ‘old’ basic pension, about £4.5K pa. My occupational pensions add up to under £8k. Combined, they're just under the threshold. However, if they increase at a similar rate to the new state pension, and go over the threshold, I will be liable for income tax, but someone with exactly the same gross income, if it is all state pension, won’t.

Home responsibilities protection for people with caring responsibilities started in 1978 so goes back quite a way. Actually being low paid and part time meant you'd save little if anything. Many women made a big mistake opting for it. I paid it for five years but only because I was pretty sure I'd have more than enough credits.

I guess working in payroll meant I knew more about it.

@TheignT My first DC was born 1970, before HRP, and no family allowance/child benefit for no 1. The second was 1972. They were both at school by 78. Much of the work I did was temping, DH worked away a lot and I couldn't commit to permanent for years. No Internet back then, info was much less available for many of us. Lots of older women with bits of pensions, we should have been more aware.

However, my point about income tax still stands.

There is an article in the Daily Mail money section about this and fairness, I didn't realise that this seems to be only those on the new state pension and not those on the old state pension that pay tax on just their pensions. It also mentions people with very small private pensions paying the full tax and also not being fair towards working people that pay tax and NI.