State pension is taxable – but this payment for those of state pension age is not

State pension is taxable – but this payment for those of state pension age is not

The state pension can be received once a person reaches state pension age. In order to get the payment, it must be claimed – otherwise the state pension is seen as being deferred.

The state pension itself is taxable, meaning that it counts in terms of Income Tax.

The standard Personal Allowance is £12,500, and this means that taxable income of up to this amount does not need to be paid tax on.

However, it may be that a person has a different Personal Allowance.

For example, this can change if a person opts to claim Marriage Allowance, or if they get Blind Person’s Allowance.

READ MORE: Tax code 1250L: This is when you will start paying Income Tax

Alternatively, the Personal Allowance may be smaller or reduced to zero for people who have income of more than £100,000.

Some people who have reached state pension age may be able to claim another payment – an income-related benefit.

This is known as Pension Credit, and it is made up of two parts: Guarantee Credit and Savings Credit.

A person needs to have reached Pension Credit qualifying age in order to claim it.

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Guarantee Credit tops up the weekly amount if it below £173.75 for single people or £265.20 for couples.

It may be that a person can get this even if they have savings, a pension, or their own home.

Savings Credit is an additional payment for people who saved some money towards their retirement, such as a pension for example.

It may be that a person is not eligible for Savings Credit if they reached state pension age on or after April 6, 2016.

The Higher rate applies to taxable income ranging between £50,001 to £150,000.

The tax rate for this band is 40 percent.

The final tax band is the Additional rate, and this applies to taxable income of more than £150,000.

For this tax band, the tax rate is 40 percent.

Published at Fri, 05 Jun 2020 09:34:00 +0000