State pension in first year

I have difficulty knowing what the state pension is in the first year. What's the best way?

Didn't find your answer?

I have difficulty knowing what the state pension is in the first year. 

I asked one of my clients to phone DWP. They told her they would send a P60.

Why cant they send everybody a P60 without being asked? Even if it's only for the first and last year?

Replies (61)

Please login or register to join the discussion.

avatar
By rmillaree
17th May 2023 17:49

Amount shown on coding notice and "information needed to help you complete your tax return" is rarely wrong.

Practicably speaking and figure within a weeks total is likely to noit be quibbled with.

It does make sense to fact check confirmed 4 weekly / weekly total with date pesnioin kicks in and see how much that should be. Think its normally soem fraction of a week out.

Thanks (0)
Replying to rmillaree:
By petersaxton
17th May 2023 18:14

When I looked there it showed the state pension for the previous year

Thanks (0)
Replying to petersaxton:
avatar
By Tax Dragon
21st May 2023 21:33

The previous year to the first year? Nil?

(Maybe the figure hasn't come through yet - be interested to know if it gets updated in due course.)

Thanks (0)
Replying to Tax Dragon:
By petersaxton
21st May 2023 22:15

Sorry, I meant I was looking for 2022-2023 and it showed me the figure for 2021-2022.

Thanks (0)
Replying to petersaxton:
avatar
By Tax Dragon
22nd May 2023 06:01

I'm still confused. I (and I think others) took "the first year" to be the year in which the pension first arose. If you mean "first full year" (ie the year after the year in which the pension first arose) then... that's the same as any other 'normal' year, n'est-ce pas? There's no funny opening years rules. (Or even unfunny ones.) The numerous and lengthy discussions we have already endured are as relevant to the year after the year in which the pension first arose as they are to the year after that and every subsequent year - up until the year in which the entitlement to the pension ceases, anyway. [How relevant that is... I won't be drawn on :-).]

Fwiw, if I the figure DWP provides (via HMRC) is available, I use it. (Past performance suggests that happens as least as quickly as these threads coalescing around a view.)

Thanks (3)
Replying to Tax Dragon:
By petersaxton
22nd May 2023 08:43

I meant the first year of receiving the pension.
In the first full year it is simply a question of taking a payment in the middle of the year and multiplying by 13. These is no such easy route for the first year.
I agree that if the amount is shown on HMRCs agent website the problem is solved for those who have agents but certainly not taxpayers who are unrepresented.

Thanks (0)
Replying to petersaxton:
avatar
By Hugo Fair
22nd May 2023 11:35

"In the first full year it is simply a question of taking a payment in the middle of the year and multiplying by 13"
... but ONLY if you want to ensure an incorrect result (which admittedly may not be wrong by a material amount but that wasn't the question).

There's the pragmatic solution (which TD amongst others has just repeated to you) ... and there's the correct calc methodology (if you want to DiY the calc) as set out by me at 19:03 on 17th May 2023 (below somewhere in this thread)!

At this point, I'm going to do a Justin ... and declare that there are only so many times that I can shout into the wind before giving up. Whether you, or anyone else, believes me is your concern not mine.

Thanks (2)
Replying to Hugo Fair:
By petersaxton
22nd May 2023 11:45

I dont believe you.
Mid tax year payments are for four weeks so when there is 52 weeks of payments in a year then 13 times each payment is correct.
All of this discussion supports my belief that HMRC should send each taxpayer a statement of pension for each tax year.

Thanks (0)
Replying to petersaxton:
avatar
By Hugo Fair
22nd May 2023 12:41

I'm not asking you to believe me ... but if you really care about getting it correct (as Lion says the differences tend to be minor), then look up the legislation covering:
- when the weekly rate (paid in 4-weekly tranches) changes during the tax year
- whether the taxable amount for a year is based on receipts or ...
- what period is covered by the first payment received in a new tax year, and how that is apportioned (by days not weeks) across the two tax years

But it's up to you ... no 'belief system' is needed, just facts.

Thanks (1)
Replying to Hugo Fair:
By petersaxton
22nd May 2023 14:17

To do the calculation you need to know the weekly pension. How many taxpayers know that?
The whole point I am getting at is that DWP should send out something like a P60.

Thanks (0)
Replying to petersaxton:
RLI
By lionofludesch
22nd May 2023 14:48

petersaxton wrote:

To do the calculation you need to know the weekly pension. How many taxpayers know that?
The whole point I am getting at is that DWP should send out something like a P60.

I'm with Peter here. If it's not going to be something obvious, like 52 x the weekly pension, DWP should say what it is and hiw they've calculated it. Most recipients aren't represented and, even if they were, this thread doesn't give any confidence that agents know what they're doing.

How hard can it be?

Thanks (1)
Replying to lionofludesch:
By petersaxton
22nd May 2023 16:30

It's a bit like asking why P60s are produced by employers. The answer is "to make it easy"!

Thanks (1)
Replying to petersaxton:
By Silver Birch Accts
24th May 2023 15:23

Not all pension providers issue a P60 for pensions nor do all public bodies.

Thanks (1)
Replying to Silver Birch Accts:
By petersaxton
24th May 2023 16:39

Silver Birch Accts wrote:

Not all pension providers issue a P60 for pensions nor do all public bodies.

Wouldnt it make sense to issue a P60?

Thanks (0)
Replying to Silver Birch Accts:
RLI
By lionofludesch
24th May 2023 16:46

Silver Birch Accts wrote:

Not all pension providers issue a P60 for pensions nor do all public bodies.

That's true. Provided there's no tax deducted.

Frankly, I think that's an oversight that just leads to taxpayers making errors.

HMRC are either helping taxpayers to get their returns right first time or they aren't.

Thanks (0)
Replying to lionofludesch:
avatar
By Hugo Fair
22nd May 2023 18:02

This is now one of those dreadful Aweb threads where it is (almost) impossible to follow a timeline of the comments ... BUT as I said at 21:40 on 17th May 2023:

"BTW of course I agree that a P60 isn't actually due ... my gripe is that everyone else (from banks to share registrars) manages to issue some sort of statement as a summary for the tax year (at least showing the totals for the year) - so why are DWP so unhelpful?"

So, when Peter complains "The whole point I am getting at is that DWP should send out something like a P60" ... my answer is that I quite agree and have never said otherwise!

However, the problem (as TD has run up against in a different way) is that in his brief OP Peter raised 3 distinct questions without making it clear which ones were inter-related or why.

As I would've thought obvious to anyone reading my posts, I was predominantly attempting to answer his 1st Q ("I have difficulty knowing what the state pension is in the first year. What's the best way?") ... by outlining the *correct way*, whilst also agreeing with you that an approximation is unlikely to be material.

This 'spat' has been brought on by my objection to Peter (despite all the above) belatedly stating that "it is simply a question of taking a payment in the middle of the year and multiplying by 13" ... pointing out that will *guarantee* an incorrect result!
I stand by that statement.

Thanks (1)
Replying to petersaxton:
By Silver Birch Accts
24th May 2023 15:21

Speaking from experience, I can confirm that you are advised what your first amount will be and when you will receive it. Every year a letter is sent, usually February, advising you of the new payments.
You can also add up amounts from the nominated bank account or use a PTA
I am looking at mine now on my personal file and have dealt with many clients as well.
Sending out a P60 is unnecessary and would be costly.

Thanks (1)
Replying to Silver Birch Accts:
By petersaxton
24th May 2023 16:38

Silver Birch Accts wrote:

I am looking at mine now on my personal file and have dealt with many clients as well.
Sending out a P60 is unnecessary and would be costly.

What about unrepresented taxpayers?

Why are P60s for employers required? Why not use the last payslip?

Thanks (0)
Replying to Silver Birch Accts:
RLI
By lionofludesch
24th May 2023 16:44

Silver Birch Accts wrote:

You can also add up amounts from the nominated bank account .....

We've already established that you can't.

Thanks (0)
Replying to petersaxton:
avatar
By Rgab1947
25th May 2023 10:02

HMRC does send me each March what my monthly pension is. I multiply by 12 and get my figure. Then the tax code will also reflect what it will be.

So no rocket science to figure out the pension to go onto the tax submission.

Thanks (0)
Replying to Rgab1947:
avatar
By paulwakefield1
25th May 2023 10:15

I don't get that. Just the DWP 4 weekly amount.

Thanks (0)
Replying to Rgab1947:
By petersaxton
25th May 2023 12:06

Which pension is that?

Thanks (0)
Replying to Rgab1947:
RLI
By lionofludesch
25th May 2023 18:23

Rgab1947 wrote:

HMRC does send me each March what my monthly pension is. I multiply by 12 and get my figure. Then the tax code will also reflect what it will be.

So no rocket science to figure out the pension to go onto the tax submission.

This is your state pension? Or a different one?

If state, why are they telling you what you get a month when they define pensions by weeks ? Why are you multiplying by 12 and not 13 ?

If different, why isn't your pension provider giving you this information ?

Thanks (0)
Replying to Hugo Fair:
RLI
By lionofludesch
22nd May 2023 11:56

Hugo Fair wrote:

"In the first full year it is simply a question of taking a payment in the middle of the year and multiplying by 13"
... but ONLY if you want to ensure an incorrect result (which admittedly may not be wrong by a material amount but that wasn't the question).

Ach - it's near enough and, indeed, it's what we were promised back at some point in the 1980s.

Thanks (0)
Replying to petersaxton:
avatar
By Tax Dragon
22nd May 2023 13:20

petersaxton wrote:

I meant the first year of receiving the pension.

So I'm stuck again on... if that was 2022/23, what's this 2021/22 figure you've got?

Thanks (0)
Replying to Tax Dragon:
By petersaxton
22nd May 2023 14:23

You are merging my answers to two different questions. I'm saying I saw a pension for the previous tax year on my portal at HMRC for one client despite looking at the year I was preparing. With another client I was wanting to know the first year pension in the tax year I was preparing the tax return for.
I have more than one client regarding state pension payments.

Thanks (0)
Replying to Tax Dragon:
RLI
By lionofludesch
22nd May 2023 14:38

Tax Dragon wrote:

petersaxton wrote:

I meant the first year of receiving the pension.

So I'm stuck again on... if that was 2022/23, what's this 2021/22 figure you've got?

£0.

Thanks (0)
Replying to lionofludesch:
By petersaxton
22nd May 2023 16:28

He thinks two different clients are only one client

Thanks (0)
Replying to petersaxton:
avatar
By Tax Dragon
22nd May 2023 17:17

Dragons can fly, breathe fire and are extremely powerful, strong and intelligent creatures. Their hard scales cannot easily be pierced. Some dragons have venomous teeth and claws.

They cannot though read minds. (You are not the first OP to expect your respondents to have such a power. I doubt you'll be the last.)

Thanks (2)
Replying to rmillaree:
RLI
By lionofludesch
17th May 2023 18:25

rmillaree wrote:
Think its normally soem fraction of a week out.

It would help, actually, if HMRC were more open about how this is calculated.

Let us not forget that the original rationale, almost forty years ago, behind changing the date pensions were increased from November to July and then to the end of the tax year, was that we would only need to deal with one weekly rate in any one tax year.

That position seems to have drifted.

Thanks (1)
Replying to rmillaree:
By SteveHa
22nd May 2023 12:03

rmillaree wrote:

Amount shown on coding notice and "information needed to help you complete your tax return" is rarely wrong.

In the first year the coding notice won't be any help. HMRC typically include a full year's restriction on a W1/M1 basis.

Thanks (2)
Replying to SteveHa:
By petersaxton
22nd May 2023 12:20

"information needed to help you complete your tax return"
is only useful to represented taxpayers unless it is provided for all taxpayers

Thanks (0)
Replying to rmillaree:
avatar
By Mr_awol
22nd May 2023 13:40

rmillaree wrote:

Amount shown on coding notice and "information needed to help you complete your tax return" is rarely wrong.

I'd disagree. Kind of.

More specifically I'd agree that where an amount is coded out it is usually correct - or at least seams reasonable. However the amount shown on the 'information needed to prepare your Tax Return' is regularly wrong, in my experience:
- Often it will show nil, even though i know full well the client is receiving it - and in some cases has been for many years, and i have the letter stating the amount.
- for the first year I'd expect it to be wrong. Often it will show, i believe, the first payment amount rather than the annual amount (TBH first year state pension SATRs dont crop up that often amongst the Returns i complete, so this might be an out of date experience/anecdote)

Thanks (1)
RLI
By lionofludesch
17th May 2023 17:49

Indeed. Any why can't they operate PAYE like everyone else ?

The official answer, by the way, is that it would be too complicated. Which sounds like a great excuse for every other employer.

Thanks (7)
avatar
By Hugo Fair
17th May 2023 19:03

"I asked one of my clients to phone DWP. They told her they would send a P60."

PLEASE tell us if your client receives that from DWP ... it would be like finding the Holy Grail in the morning, and then getting on your Unicorn to visit the newsagent so as to buy the week's winning Lottery ticket.
[I've asked countless times over the years - in policy meetings not just over the phone - and never received any other answer than variations on "we don't need to!"]

BTW whilst I agree that it would be both sensible & helpful were they to issue P60s, they are needed *every* year (not just in first and last years) ... due to the combination of:
* only making what is supposed to be a weekly payment every 4 weeks (neither weekly nor monthly);
* changing the weekly rate with effect from the first Monday in the new Tax Year;
* only issuing one letter p.a. (stating the new rate), without any indication as to how a payment (that straddles tax years) should be split/allocated.

FWIW my (personal) spreadsheet:
1. sets up a 4-weekly calendar of when the individual should (subject to potential clashes with bank holidays) expect to receive payment;
2. takes the first payment received in a tax year - and splits into 3 portions (using whole-day pro-rating):
- old rate x (number of days since last payment upto/incl 5th April);
- old rate x (number of days from/incl 6th April upto/incl final day at old rate);
- new rate x (28 minus the number of days used in both previous calcs).
[It usually agrees, within pennies, to what HMRC later push through their APIs].

Thanks (3)
Replying to Hugo Fair:
avatar
By More unearned luck
17th May 2023 19:48

There was a long thread about a year or so ago about how to arrive at the quantum of the SP.

In my experience in a normal year HMRC simply multiply the weekly rate in force for most of that year by 52 and expect taxpayers to multiply instead by 53 in any year in which there are 53 pay days (which I don't think is legal. Can you be taxed on 371 days' income when no tax year is longer than 366? TD pointed out that ordinarily, taxpayers relying on HMRC's figure are under declaring by 1/365 or 2/366, but I say HMRC can forgo tax on a day's income or on two days' income for simplicity using their care and management powers.

Thanks (1)
Replying to More unearned luck:
avatar
By Hugo Fair
17th May 2023 21:40

I remember the thread, but couldn't be bothered to search for it and re-read it all ... especially since as far I recall there were lots of opinions but no final agreement?

The legislation determines the day on which the rate changes, and the individual has a 'payment day' (on a 4-weekly cycle) which used to relate to your NINO but is I think nowadays just 'it is what it is' for a person (and identifiable from their bank statement).

The weekly rate for a person is notified to them by DWP (the only letter typically issued) - but if lost, the rate can simply be calculated (except in a few exceptional circumstances) by dividing any payment (other than the 1st one in the tax year) by 4.

So, now that you've got the dates and the rates, I think you'll find my fairly simple apportionment method for the first payment in each tax year will get you to the right answer.
Well 'right' as in (a) it seems both compliant & logical to me, and (b) it generates the same result as what HMRC's API throws out as a value (to save one the bother)!

A long-winded way of saying that I disagree with your 'in my experience' method - and I don't end up with any concerns over 52 v 53 weeks. But the differences aren't usually great ... and in the absence of clear legislation or guidance, I'm happy that we each do what we feel is correct (and do it consistently)!

BTW of course I agree that a P60 isn't actually due ... my gripe is that everyone else (from banks to share registrars) manages to issue some sort of statement as a summary for the tax year (at least showing the totals for the year) - so why are DWP so unhelpful?

Thanks (2)
Replying to Hugo Fair:
RLI
By lionofludesch
17th May 2023 22:06

Hugo Fair wrote:

I remember the thread, but couldn't be bothered to search for it and re-read it all ... especially since as far I recall there were lots of opinions but no final agreement?

The legislation determines the day on which the rate changes, and the individual has a 'payment day' (on a 4-weekly cycle) which used to relate to your NINO but is I think nowadays just 'it is what it is' .....

No, no, no. It depends on the fifth numeral in your NI number.

Monday 0 or 1
Tuesday 2 or 3
Wednesday 4 or 5
Thursday 6 or 7
Friday 8 or 9

Thanks (0)
Replying to lionofludesch:
avatar
By Hugo Fair
17th May 2023 22:37

OK, live and learn (though I think you may have told me that a few years ago ... so 'live, forget and get reminded' may be more apposite).
Anyway it explains why I always (subject to bank hols) get paid on a Monday.

But my method (outlined earlier) still works - if of course anyone cares!

Thanks (2)
Replying to Hugo Fair:
RLI
By lionofludesch
18th May 2023 10:40

Hugo Fair wrote:

But my method (outlined earlier) still works - if of course anyone cares!

Sure. The question was about the first year, so I would suggest that the best method would be to work on what's banked plus whatever weeks at the old rate are included in the payment which straddles 5th April.

Or - you can count the days and multiply it by the old rate.

Or - you can count the paydays and multiply it by the old rate.

Then take the lowest of the three.

Thanks (0)
Replying to lionofludesch:
By petersaxton
19th May 2023 08:34

It would be a lot more sensible if DWP just told pensioners what they have been paid for each tax year.

I dont care if it's called P60 or "statement of pension paid in tax year".

If there is self assessment then government departments should make it easy for tax payers.

Thanks (1)
Replying to petersaxton:
RLI
By lionofludesch
19th May 2023 09:32

petersaxton wrote:

It would be a lot more sensible if DWP just told pensioners what they have been paid for each tax year.

I dont care if it's called P60 or "statement of pension paid in tax year".

If there is self assessment then government departments should make it easy for tax payers.

Couldn't agree more.

Thanks (1)
Replying to petersaxton:
avatar
By More unearned luck
21st May 2023 13:11

"It would be a lot more sensible if DWP just told pensioners what they have been paid for each tax year."

But pensions are not taxable on what was been paid in the tax year.

But what you wish for came true years ago. Look up your client on your agent access and click on "information to help you to complete your tax return", to find HMRC's opinion of the quantum, (usually).

Thanks (0)
Replying to More unearned luck:
By petersaxton
21st May 2023 15:55

"But pensions are not taxable on what was been paid in the tax year."

I didnt say they were. There's an amount paid for each tax year.

This is the whole point of the thread.

I did see the information you referred to for the client I was talking about but I am sure that there are other clients who didnt have the amount in the field you suggested. It also doesnt help none represented taxpayers.

Thanks (0)
Replying to lionofludesch:
avatar
By Cathro
24th May 2023 11:14

Good to know that should I live to see my state pension I can look forward to it being paid on a Monday... Always learning something useful on here

Thanks (0)
avatar
By More unearned luck
17th May 2023 19:31

The state pension is not subject to PAYE and therefore the advice that a P60 would be sent is simply wrong.

I have no difficulty in working out the state pension. I follow this three step process:
1) ask the client for the paperwork issued by the DWP
2) read that paperwork
3) multiply the weekly rate by the number of pay days in the year.

The year of death also does not usually present any difficulties if the weekly rate for that year is known. You simply count the number of pay days between 6 April and the DoD x the weekly rate.

You can tell from the NI number the pension's pay day, although the date of the first payment in the above paperwork is a big clue.

I find that the figure in the year 1 notice of coding to be unreliable, especially if the code is on a week1/month1 basis. These manual calculations are only performed to check that my software has computed the correct total.

Thanks (1)
Replying to More unearned luck:
By petersaxton
17th May 2023 19:48

“I have no difficulty in working out the state pension. I follow this three step process:
1) ask the client for the paperwork issued by the DWP”
This is the first problem. Clients rarely file paperwork issued by DWP to places they know where to find it.

“You simply count the number of pay days between 6 April and the DoD x the weekly rate.”
I would count the number of days starting with 5 April.
See above for the problem with knowing the weekly rate. If there’s a couple of payments after the end of the tax year it’s possible to calculate.

Thanks (0)
Replying to petersaxton:
By Silver Birch Accts
24th May 2023 15:32

Well educate your clients to save DWP correspondence and place it a file or photo (using a mobile) it and send to you. I receive photos of tax documents all the time, even from more elderly clients.

Thanks (1)
Replying to Silver Birch Accts:
By petersaxton
24th May 2023 16:42

Everything is easy if clients do what accountants tell them to do but unfortunately many clients wont do it and also taxpayers who are not represented will have problems.

It would make sense to receive a document once a year and in big letters tell the pensioner to save the document for if the have to complete a tax return.

Thanks (0)
avatar
By raybackler
24th May 2023 10:34

I had a letter from HMRC after submitting my first SA Return when in receipt of state pension for the first time. I had foolishly entered what I received between 1st December and 5th April. I was told to enter the figure from my Personal Tax Account under the 'Information to Complete a Tax Return' heading. It was a few pounds different. Apparently this figure is adjusted to the actual amounts due in a tax year, i.e. it is on an accruals basis.

At the start of this tax year, I had a letter saying my pension had increased from £185.15 that had been paid from 12th April 2022 to £203.85 per week from 11th April 2023. The amount I received on Monday 17th April was £759.30 (my NI number 5th digit is a 1) and on Monday 15th May was £815.40. The April payment was, therefore, three weeks at the old rate and one week at the new rate. This would indicate that the payment is adjusted in whole weeks.

Thanks (2)

Pages