Submit Self Assessment or not ?

[Gersemi]

What can you not get your head around? Like I said, the tax wasn't collected via PAYE, IR sent you an assessment and you made a direct payment to them, in very similar way to the way self employed people pay their tax.

That these were "very rare" - given SERPS.

Ah, I can only tell it the way I remember it. How long has SERPS been in for? Perhaps not many people retiring back then had built up very much?

[ursaminortaur]

What can you not get your head around? Like I said, the tax wasn't collected via PAYE, IR sent you an assessment and you made a direct payment to them, in very similar way to the way self employed people pay their tax.

That these were "very rare" - given SERPS.

Ah, I can only tell it the way I remember it. How long has SERPS been in for? Perhaps not many people retiring back then had built up very much?

SERPS was introduced in 1978.

https://www.profilepensions.co.uk/blogs/what-is-serps

SERPS was introduced four decades ago in 1978 as a top-up to the basic state pension. The amount you’d receive from SERPS was related to your earnings over your working life, and you’d only be eligible for the scheme if you were an employee making Class 1 National Insurance Contributions. Self-employed people were not eligible for SERPS. In April 2002, SERPS was replaced by the State Second Pension.

[XFool]

What can you not get your head around? Like I said, the tax wasn't collected via PAYE, IR sent you an assessment and you made a direct payment to them, in very similar way to the way self employed people pay their tax.

That these were "very rare" - given SERPS.

Ah, I can only tell it the way I remember it. How long has SERPS been in for? Perhaps not many people retiring back then had built up very much?

https://en.wikipedia.org/wiki/State_Earnings-Related_Pension_Scheme

The State Earnings Related Pension Scheme (SERPS), originally known as the State Earnings Related Pension Supplement, was a UK Government pension arrangement, to which employees and employers contributed between 6 April 1978 and 5 April 2002, when it was replaced by the State Second Pension.

https://en.wikipedia.org/wiki/State_Second_Pension

By "SERPS" here I really mean to include SERPS and the S2P. And don't forget the original Graduated Retirement Benefit (GRB). (Many people do - though it doesn't amount to much, due to 1970s/80s inflation). So I mean the BSP plus Additional State Pension.

I just find it surprising that only a tiny minority of people on the old SP (with SERPS etc.) would have to pay tax on their SP and, if they did, they would be in such a minority that they would need some kind of special arrangement to pay it.

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

Though when the New SP started it was based on £144 pw, £7,488 pa. The average total SP at that time, AFAIK. The standard Personal Allowance for 2016 was £11,000.

[Gersemi]

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

HMRC/IR don't pay the SP, it's paid by the DSS. Anyway in order to operate PAYE on the SP HMRC would have to issue a tax code to everyone receiving it, when most aren't liable to tax (or least not just because of the SP). Someone decided it was easier just to code it out of other income where possible as most pensioners liable to tax have occupational pensions, and deal with the exceptions in other ways.

[XFool]

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

HMRC/IR don't pay the SP, it's paid by the DSS. Anyway in order to operate PAYE on the SP HMRC would have to issue a tax code to everyone receiving it, when most aren't liable to tax (or least not just because of the SP). Someone decided it was easier just to code it out of other income where possible as most pensioners liable to tax have occupational pensions, and deal with the exceptions in other ways.

Again! That is exactly NOT the question...

I'm giving up on this one.

Answer: Nobody knows...

[Lootman]

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

HMRC/IR don't pay the SP, it's paid by the DSS. Anyway in order to operate PAYE on the SP HMRC would have to issue a tax code to everyone receiving it, when most aren't liable to tax (or least not just because of the SP). Someone decided it was easier just to code it out of other income where possible as most pensioners liable to tax have occupational pensions, and deal with the exceptions in other ways.

Again! That is exactly NOT the question...

The message you wrote that Gersemi replied to did not include a question. Rather it was an assumption and, as it happens, a false one.

There are of course lots of ways that HMRC could theoretically handle the SP. What we have all been telling you is the way they actually handle it! And that is to not apply PAYE or withholding, and then rely on the individual taxpayer to take action if he/she believes that tax is due.

PAYE/withholding also does not apply to a variety of other forms of income that a retired individual may have such as dividends, interest, capital gains, rents, profits, foreign income and so on. PAYE is really only for employment earnings and non-State pensions. And that is why I have no PAYE code despite having a reasonably high and definitely taxable retirement income. I don't have one, don't need one and don't want one.

[scrumpyjack]

Quite so. The clue is in the name Pay As You EARN

[Lootman]

Quite so. The clue is in the name Pay As You EARN

And of course payouts from occupational pensions are simply deferred earnings that were not previously taxed, which is presumably why the taxman wants PAYE to apply to those payments as well. Handy for catching those who move overseas after retirement and may not otherwise be easy to tax.

[XFool]

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

HMRC/IR don't pay the SP, it's paid by the DSS. Anyway in order to operate PAYE on the SP HMRC would have to issue a tax code to everyone receiving it, when most aren't liable to tax (or least not just because of the SP). Someone decided it was easier just to code it out of other income where possible as most pensioners liable to tax have occupational pensions, and deal with the exceptions in other ways.

Again! That is exactly NOT the question...

The message you wrote that Gersemi replied to did not include a question. Rather it was an assumption and, as it happens, a false one.

So you are claiming to know more about my question than I do?

Why am I not surprised?

There are of course lots of ways that HMRC could theoretically handle the SP. What we have all been telling you is the way they actually handle it!

Which, as I said: "Is exactly NOT the question..." (I was seeking an answer to)

Why not? Because I already know how it works now; when you have a SP (old style) and also another pension plus other income (dividends and interest).

How do I know? Because that is my situation and I am taxed for that situation currently, which is why I know ALL my (income type) tax is taken solely from my ex-employer's pension - whether tax due on that pension, tax on the SP, tax on interest or tax on dividends. I also know it is done via the PAYE system using a Personal Tax Code. (Plus any needed adjustments pursuant to SA)

And that is to not apply PAYE or withholding, and then rely on the individual taxpayer to take action if he/she believes that tax is due.

PAYE/withholding also does not apply to a variety of other forms of income that a retired individual may have such as dividends, interest, capital gains, rents, profits, foreign income and so on. PAYE is really only for employment earnings and non-State pensions. And that is why I have no PAYE code despite having a reasonably high and definitely taxable retirement income. I don't have one, don't need one and don't want one.

You are seriously misinformed!

N.B. I am NOT disagreeing with you over how YOUR tax affairs are ordered. I do not know anything about that, how can I? It is none of my business.
But the mistake you are making is that if YOUR situation is such and such, so is everyone else's. It is NOT so, why should it be?

Let us just forget my original question, shall we?

[Lootman]

I always assumed that, like now, HMRC (or IR), would know the applicable Tax Allowance (simpler than now) and the individual/family SP amount and just tax it at 20% before payment where needed. Seemed simple enough.

HMRC/IR don't pay the SP, it's paid by the DSS. Anyway in order to operate PAYE on the SP HMRC would have to issue a tax code to everyone receiving it, when most aren't liable to tax (or least not just because of the SP). Someone decided it was easier just to code it out of other income where possible as most pensioners liable to tax have occupational pensions, and deal with the exceptions in other ways.

Again! That is exactly NOT the question...

The message you wrote that Gersemi replied to did not include a question. Rather it was an assumption and, as it happens, a false one.

So you are claiming to know more about my question than I do?

No, I am claiming that there was no question asked in the post of yours that Gersemi responded to. There was an erroneous assumption in it, which Gersemi corrected, and which both Scumpyjack and I agreed with.

Now, if you have an actual question you wish to ask, then go ahead and ask it. Although if Scotview has had his original question answered, and I believe he has, then you might want to start a new topic to ask about whatever it is that you do not know. Bearing in mind that this is the Taxes (Practical) board, and not the "This is my personal theory about how taxes should work" board.

[XFool]

Quite so. The clue is in the name Pay As You EARN

Is, or is not, a pension EARNINGS? Discuss...

Is interest EARNINGS? Well people talk of "earning interest"...

Are dividends EARNINGS? Well, shares have an "earnings per share"...

Seen on the Interwebz:

"Earnings"

NOUN
money obtained in return for labour or services.
"he claimed damages for loss of earnings"

synonyms: income · wages · salary · stipend · pay · take-home pay · gross pay · net pay · revenue · yield · profit · takings · proceeds · dividends · gain · return · remuneration · emolument · payment · fees · honoraria · fringe benefits

income derived from an investment or product.

Let's have a 'philosophical' debate!

(But please let's just forget about my original question...)

Moderator Message:
The usual ill-tempered spat between the usual two posters. Yawn. Thread duly closed. --MDW1954