Dwp state pension warning over £597 hmrc limit

Dwp state pension warning over £597 hmrc limit

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SOME PEOPLE MAY BE UNAWARE THAT THEY OWE TAX 14:13, 04 Jun 2025 People of State Pension age are being warned they could owe money to the taxman if they earn more than £597 a year. From


April, the State Pension increased by 4.1 per cent due to the Triple Lock. The Triple Lock uprates State Pension payments by inflation, wage growth or 2.5% - whichever is higher. The full


rate of the new State Pension is now £230.25 per week or £11,973 a year. But this means that pensioners receiving this amount will be just £597 away from the Personal Allowance of £12,570.


Every £1 earned over £12,570 is taxed at 20 per cent - up to £50,270, where it goes up to 40 per cent. Article continues below You could owe income tax to HMRC if you earn more than £597


each week. READ MORE: NEW JUNE £200 COST OF LIVING PAYMENTS TO OPEN WITHIN DAYS This does not just have to be from employment as income from private workplace pensions or letting a property


also count. The Low Incomes Tax Reform Group now wants the Department for Work and Pensions ( DWP ) and HMRC to warn pensioners if they are approaching the threshold. It said: "We think


that DWP and HMRC should work together to ensure that pensioners are warned about possibly needing to pay tax on their State Pension in future. "This should include setting out how the


tax will be collected and the likely tax liability. "Some words of warning could, for example, be included with the State Pension notification letters that DWP send out each spring in


advance of the April pension increases." Financial guru Martin Lewis stressed that paying tax on some of your income as a pensioner will not always leave you worse off - as the tax


system is 'marginal'. In March, he was asked: "Explain to me why any pensioner would want to increase their pension? "You will be taxed 20 per cent over £12,570, which


means you’ll be worse off and you’ll be asked to pay more in, you’d then have your benefits stopped if you’re below the limit and that takes you below the limit and that takes you over the


limit even by 10p." Martin said: "Let me split that into two. Without being rude, on the first bit you’re talking nonsense. _Don't miss the biggest and breaking stories by


signing up to the BirminghamLive newsletter here._ "Okay, look, tax in this country is marginal. You only pay 20 per cent on the amount above the threshold. "The State Pension has


always been taxable if you have other income, it counts as taxable income. "So look, let’s say you add £1,000 a year to what you earn and that £1,000 is above the threshold. "Yes


it’s taxed so you only get £800 of it. "But you still get £800 more! Tax is marginal, you always want to earn more, you always receive more if you earn more. "You might not get


every pound more that you’re being given but you’re still, the more you earn the more you get, so the tax thing, that’s a red herring." Article continues below Martin said that the


other aspect could cost you money if, for example, you paid to buy back a missing National Insurance year to boost your pension pot when you could have used Pension Credit for free. He


added: "The other one isn’t - for those on very low incomes if you may be eligible for Pension Credit and you don’t have any other income, the Pension Credit effectively tops you up to


the full State Pension anyway so if you’re gonna buy years to top you up to the full State Pension a it is possible that you would have simply got it via pension credit anyway."