Paying tax on your pensions

[stevewool]

Can I  ask any members here mainly from the UK and are claiming a state pension plus being paid out on your private pension, are you paying tax on it , plus if you still have saving here in a UK bank with this added to your Tax allowance are you being hammered for tax .

[RobH]

Hi Steve, I live in the Philippines and still pay tax on one of my private pensions. I get over the £12750 allowance. I don't think it's fair to pay tax when you don't get any of the services I would get if I lived in the UK. 

Not going back to live in the UK though, still a lot cheaper to live here. as an aside Nat west are terminating  my bank account in the UK as I live here.

 

[stevewool]

4 hours ago, RobH said:

Hi Steve, I live in the Philippines and still pay tax on one of my private pensions. I get over the £12750 allowance. I don't think it's fair to pay tax when you don't get any of the services I would get if I lived in the UK. 

Not going back to live in the UK though, still a lot cheaper to live here. as an aside Nat west are terminating  my bank account in the UK as I live here.

 

Thanks for getting back so quick Rob, I’m not due to get my state pension for another 19 months , but I am taking my private pension just under the tax threshold but with interest on savings I do pay some tax , I’m trying to sort out the best way so I won’t get hammered for tax either by reducing my private pension once the state pension comes in and transferring the savings into wife’s account , 

[Huggybearman]

I have the UK state pension together with my main occupational pension and a smaller third pension. Although the basic state pension is tax free, if it puts your other pensions (or other income) over your personal allowance then you have to pay tax on your total combined income, less your personal allowance. In my case the total tax burden is on my main pension and, to a lesser degree, my third pension. When the state pension is increased this month by about 10% I fully expect the increased tax liability to be reflected in slightly reduced income from my other two pensions. Once you are in receipt of your UK state pension it would be prudent to offload some of your other income, such as interest on savings, to reduce your tax liability caused by your state pension income. Have you considered putting your savings into an ISA? I think that would achieve your purpose as I believe income from that is tax free.

[hk blues]

1 hour ago, Huggybearman said:

I have the UK state pension together with my main occupational pension and a smaller third pension. Although the basic state pension is tax free, if it puts your other pensions (or other income) over your personal allowance then you have to pay tax on your total combined income, less your personal allowance. In my case the total tax burden is on my main pension and, to a lesser degree, my third pension. When the state pension is increased this month by about 10% I fully expect the increased tax liability to be reflected in slightly reduced income from my other two pensions. Once you are in receipt of your UK state pension it would be prudent to offload some of your other income, such as interest on savings, to reduce your tax liability caused by your state pension income. Have you considered putting your savings into an ISA? I think that would achieve your purpose as I believe income from that is tax free.

Pretty much as I understand it.

Whilst pretty much all info on UK state pension states it is tax free, this can be misleading as, whilst it in itself is paid free of tax, it does count towards your personal allowance.  There may well be a time in the future where the state pension amount is greater than the personal allowance and it would then become taxable in part.

Great advice on moving savings to reduce tax liability, especially the ISA suggestion.

[stevewool]

3 hours ago, Huggybearman said:

I have the UK state pension together with my main occupational pension and a smaller third pension. Although the basic state pension is tax free, if it puts your other pensions (or other income) over your personal allowance then you have to pay tax on your total combined income, less your personal allowance. In my case the total tax burden is on my main pension and, to a lesser degree, my third pension. When the state pension is increased this month by about 10% I fully expect the increased tax liability to be reflected in slightly reduced income from my other two pensions. Once you are in receipt of your UK state pension it would be prudent to offload some of your other income, such as interest on savings, to reduce your tax liability caused by your state pension income. Have you considered putting your savings into an ISA? I think that would achieve your purpose as I believe income from that is tax free.

Yes I have the ISA which is tax free for now, and is topped up every year but it’s the other savings that I will have to transfer into Emma’s  accounts , it’s my private pension that I need to sort out by reducing what I receive before the state pension comes in .

Its amazing when you young your told to save and put as much as you can in your private pensions ready for your retirement , and when you get there your hammered in tax again .

[hk blues]

3 minutes ago, stevewool said:

Yes I have the ISA which is tax free for now, and is topped up every year but it’s the other savings that I will have to transfer into Emma’s  accounts , it’s my private pension that I need to sort out by reducing what I receive before the state pension comes in .

Its amazing when you young your told to save and put as much as you can in your private pensions ready for your retirement , and when you get there your hammered in tax again .

I have 4 private schemes in addition to state pension but only 1 is defined contribution thus more flexible in how it's paid out - the other 3 are defined benefit so fixed although I can divert some portion to widow's pension to reduce my monthly payment.  I'm not convinced that would be the best option financially and I may just decide to take the hit on tax.