When you retire do you have to start doing Self Assessment for tax?

[pensionsums]

I currently do self assessment because I am self employed. I've been thinking about retirement recently, and this got me wondering about people who have worked for someone else their whole lives, and then retire. These people would never have done self assessment in their lives, but may have a pension income that exceeds the personal allowance. Do you think these people know that they have to do self assessment? It's just occurred to me that my elderly Dad gets more than the personal allowance in pension payments, but I know he definitely doesn't do a tax return because he's not capable!! I do most things for him, and it has never crossed my mind until now!!

Do you mean for people that just have state pension (which is not taxed at source) and a private pension? If so, HMRC know the amount of state pension that taxpayers will get for the year and make an adjustment to their tax code to collect the right amount of tax from their private pension.

Depends how complicated your income is, I still do one because mine is fairly complicated so I just give them the info on the self assessment and they figure it out!

If it's all straightforward just ask them if you still need to do one. Don't just stop until they say it's OK or you could still get fined.

Would only be an issue if the state pension is higher than the personal allowance and no other pension to be able to collect the tax through paye code. Hmrc may do a simple assessment in these cases rather than self assessment

I guess as you say a lot of people have never done one and have just relied on their employer and the banks and building societies to deduct tax, which they don't do any more. It could be easy to be earning too much, rather than filling in the form you can just send a letter to HMRC declaring any other income.

I was in a similar situation. Because I retired mid tax year I did a self assessment the following January. After that, I called HMRC to explain and they said not to do another one as they had all the information and would tax my private pension. I've had no problems since so I don't think pensioners need to do one if they're not working.

HMRC has a questionnaire on its website whereby you fill in a few details about your sources of income to determine whether you need to fill in a self assessment tax form or not.
If all your income is taxed at source then you probably won't need to. HMRC can find out whether you receive state pension or not, and how much, and will adjust your tax code accordingly, as a PP says.

I have never filled in a Tax assessment although I thought I might be sent one after I got divorced.

When I retired I was asked by the Tax office which of my two company pensions I wanted the tax deducted from. I’m pretty sure that my savings and investments generate more interest than the current annual allowance but to be honest I have never added up the interest I earn, too much effort!

I’m just leaving it until I get asked to declare my income, if ever! My FSA reckons the tax office don’t go after small investors like me!

DH has retired and gets a workplace pension. It is taxed ar source just like his salary was. He's not old enough for a State Pension yet but I should imagine that will be automatically taxed by HMRC once he does. All credit interest on savings is reported direct to HMRC by the bank/building society so are included in his tax code.
So it will depend where your income comes from as to whether or not you need to do a tax return to declare things that HMRC may not be otherwise aware of eg rental income from property

If he has an annuity then it's paid though paye the same as if he's working. If he's also getting a state pension then the tax code on his private pension will be adjusted so he gets a smaller amount tax free so if he gets £9k state pension his tax code will be adjusted so he gets £3500 tax free on his private pension. If it's a drawdown pension where he draws down as required, I believe the default is to deduct tax which can be claimed back in a p55 form if you have overpaid (this is based on researching drawing my own sipp) although I think once the tax year has ended if too much tax is paid it should automatically refunded or the tax code amended for the current year so he pays less tax. So basically I don't think you have to do anything.

I do but I have a complicated range of incomes - state pension, a drawdown pension that I take different amounts from each year, a tiny defined benefit pension, occasional work that is taxed at source and occasional work that is not taxed at all and sometimes goes over the £1k threshold.

I'm very glad I had years of doing self assessment when I was self employed or my brain would have exploded by now.

I have two private pensions and am retired. My tax allowance us against one of my pensions and the other is BR. I don't do a tax return and haven't during my retirement.

From experience when you draw your pension the provider has to declare the payments to HMRC, in effect they treat it like PAYE. Simple if you have one pension. Then they deduct tax in the normal way at source.

I have an NHS pension but also still work part time so have to do self assessment as well. I have a number of savings accounts and after my first year of pension + self employed return they have just altered my tax code to take into account untaxed interest on savings accounts.
I assume this is estimated based on the previous year’s interest I declared in 23/24. So it will be adjusted when I submit my self assessment for the current year.

DH has no savings accounts so has not had to submit a self assessment.

So in answer to your question if your DF has no savings and his sole income is his pension then there is no need for self assessment.

They can, of course ask you to submit a self assessment if they want. I think that all financial institutions have to submit details of any customer who has a savings account and earns untaxed interest. It’s all fairly automated now.

But essentially your pension is dealt with in the same way a salary is so taxed at source. It’s great that you no longer have to pay in advance twice a year but once you stop working all together you will have to submit a final self assessment to reclaim overpaid tax and maybe continue if you have savings and investments on top of your pension. But it will be a much simpler procedure.

I don't and have a state and private pension. I get regular updates from them if there is a tax code change.

A couple of points in your OP are incorrect.

It's not only the self employed who have to do self assessment, it's also done for many other reasons as you will see when you do yours. The questions it asks at the beginning about your sources of income account for this.

But its not always necessary for retired people, or anyone else who hasn't paid sufficient tax on all their income, this can be done by adjusting tax codes.

This has just happened to me as I earn around the higher rate tax band and have sufficient savings for some to be taxable.

Employers, pension providers including the state pension, banks and reselling platforms all make reports to HMRC, who use this information to identify anyone who may need to pay more tax.

What they seem to do is predict your income, adjust your tax code accordingly and then review the information year by year as they go along.

It would only be people who have income outside the above system, eg self employment or from a rental property who would need to do SE, which applies whatever their age.

I have a pension and tax it taken off it before I receive it. PAYE doesn't stop when you get a pension.

Things vary depending on circumstances. I'm self employed and complete a tax return. I recently got a pension from a previous employer and they pay it to me gross, they don't tax it. DH has a pension from the same employer and it is taxed through PAYE.

DH has been retired for several years. His pensions are taxed at source but the Inland Revenue have recently decided that due to interest on savings he needs to complete a tax return (not sure how they are aware - from banks?) and written to him asking for him to complete a simple tax return. He doesn't have much savings but state pension and private pensions would make any interest taxable.

When I turned 60 in addition to working I started getting a defined benefit pension

Never had to fill in anything HMRC just send a notice of coding

No he does not need to do self assessment. His pension is paid in full and excess tax is taken at source via his employer or pension provider.

One thing to be aware of, which is happening the first time this year. In view of the high rate of interest a lot of pensioners are getting a tax bill for the first time. If your dad has high paying building Society account it could be worth putting some money away each month ready for when the bill comes. He won’t have the bill until next February and it needs paying by the end of April.

Just to give an example, my bill was £600 and DH £1100. He needs to maximise his ISA allowance this year and next if he can afford it.

I have the state pension, plus two small private pensions. Up to last year, I paid all the tax due from one of the private pensions. Last tax year (2023-24) my savings interest was over the £1000 tax-free limit, but I still didn’t have to do a self-assessment form. Instead I got an email from HMRC that my tax calculation was available online, or via the HMRC app. I checked the amount due & paid online. It was referred to as a Simple Assessment. It was very easy to do.

As pp have mentioned, the tax code will be adjusted accordingly. My dm did complete a self assessment as she received a pension from overseas too. She didn’t find it too onerous to complete the form as it was the same boxes to complete every year and she kept all her the paperwork.

@custardpyjamas it's even more complicated than them telling you to stop - years ago, I had letters saying I no longer needed to do a tax return, but the email reminders kept coming so I kept doing them. One year I rang HMRC and the very nice lady said it didn't sound like I needed to do one - but still the emails kept coming. Until they switch them off at their end, I'm going to keep submitting one - even if the amount payable is £1.18, as it was last year! 🙄

Usually it’s on the taxpayer to let HMRC know they don’t need to complete self-assessment anymore. You just need to phone HMRC and they’ll take you off the system.

DH had dividend income over £1k last year so he rang them and they just adjust his tax code the following year.

I still do, I have a private pension, a tiny income, savings interest and dividends.
DH does not with annuity, DC drawdowns, a tiny income and savings interest.

It depends.

Yes. I got pulled up last year for interest income for the first time in 4 years.