In a new and exclusive Q&A, money expert Jasmine Birtles answers your pensions and retirement questions. Have you got a question you'd like Jasmine to answer? Email money@gbnews.uk.
Question: "Hi. I receive the 'old' state pension and a small private pension.
"I already pay some income tax which is taken from my private pension. Will I have to notify HMRC now that the state pension has increased?"
Jasmine replies: Well, first of all, the good news is that HMRC usually keeps track of both private pensions (especially if tax is already deducted at source) and state pension increases.
So, you shouldn’t have to do anything.
They may automatically adjust your tax code to reflect any additional tax due on your private pension now that there is a higher state pension.
According to Danielle Slater, director of Stephen Eve Financial Planning, it is important to do as you are doing and consider the personal allowance - that is the amount you can earn each year without paying income tax.
A pensioner who is already being taxed on their pension income has asked if they need to contact HMRC after their state pension increased
GETTYShe says: “The increased state pension might push your total income above this threshold, potentially leading to tax on your private pension, depending on your individual circumstances.
“Don't forget about other deductions you might have too.
"If you make charitable donations or have other allowable deductions, you might still fall under the personal allowance threshold even with the increased state pension.”
Of course, HMRC should have your correct tax code already to make sure that you pay the right amount but it’s always a good idea to call them to make sure they really do have the correct tax coding for you – they often make mistakes.
Also, it’s a good idea to consult with a qualified financial advisor or accountant for personalised advice on your specific situation.
They can help you understand the full impact of the state pension increase on your taxes and explore any potential tax-saving strategies.
READ MORE:
You can find one that has good reviews from their clients by going to Vouchedfor.com.
If you haven’t already had your free advice session with Pension Wise then do get in touch with them.
You might as well as it’s free!
Jasmine Birtles is a personal finance expert, TV and radio presenter and author of 38 books.
She is the founder of the money and investment site MoneyMagpie.com and a keynote speaker at conferences around the world.
