{"id":158712,"date":"2025-06-04T23:12:10","date_gmt":"2025-06-04T23:12:10","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/158712\/"},"modified":"2025-06-04T23:12:10","modified_gmt":"2025-06-04T23:12:10","slug":"dwp-state-pension-warning-over-597-hmrc-limit","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/158712\/","title":{"rendered":"DWP State Pension warning over \u00a3597 HMRC limit"},"content":{"rendered":"

Some people may be unaware that they owe tax\"SomeSome people may be unaware that they owe tax<\/p>\n

People of State Pension age are being warned they could owe money to the taxman if they earn more than \u00a3597 a year.<\/p>\n

From April, the State Pension increased by 4.1 per cent due to the Triple Lock.<\/p>\n

The Triple Lock uprates State Pension payments by inflation, wage growth or 2.5% – whichever is higher.<\/p>\n

The full rate of the new State Pension is now \u00a3230.25 per week or \u00a311,973 a year.<\/p>\n

But this means that pensioners receiving this amount will be just \u00a3597 away from the Personal Allowance of \u00a312,570.<\/p>\n

Every \u00a31 earned over \u00a312,570 is taxed at 20 per cent – up to \u00a350,270, where it goes up to 40 per cent.<\/p>\n

You could owe income tax to HMRC if you earn more than \u00a3597 each week.<\/p>\n

READ MORE: <\/strong>New June \u00a3200 cost of living payments to open within days<\/a><\/strong><\/p>\n

This does not just have to be from employment as income from private workplace pensions or letting a property also count.<\/p>\n

The Low Incomes Tax Reform Group now wants the Department for Work and Pensions ( DWP<\/a> ) and HMRC to warn pensioners if they are approaching the threshold.<\/p>\n

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.<\/p>\n

“This should include setting out how the tax will be collected and the likely tax liability.<\/p>\n

“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.”<\/p>\n

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’.<\/p>\n

In March, he was asked: “Explain to me why any pensioner would want to increase their pension?<\/p>\n

“You will be taxed 20 per cent over \u00a312,570, which means you\u2019ll be worse off and you\u2019ll be asked to pay more in, you\u2019d then have your benefits stopped if you\u2019re below the limit and that takes you below the limit and that takes you over the limit even by 10p.”<\/p>\n

Martin said: “Let me split that into two. Without being rude, on the first bit you\u2019re talking nonsense.<\/p>\n

Don’t miss the biggest and breaking stories by signing up to the BirminghamLive newsletter here<\/a>.<\/p>\n

“Okay, look, tax in this country is marginal. You only pay 20 per cent on the amount above the threshold.<\/p>\n

“The State Pension has always been taxable if you have other income, it counts as taxable income.<\/p>\n

“So look, let\u2019s say you add \u00a31,000 a year to what you earn and that \u00a31,000 is above the threshold.<\/p>\n

“Yes it\u2019s taxed so you only get \u00a3800 of it.<\/p>\n

“But you still get \u00a3800 more! Tax is marginal, you always want to earn more, you always receive more if you earn more.<\/p>\n

“You might not get every pound more that you\u2019re being given but you\u2019re still, the more you earn the more you get, so the tax thing, that\u2019s a red herring.”<\/p>\n

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.<\/p>\n

He added: “The other one isn\u2019t – for those on very low incomes if you may be eligible for Pension Credit and you don\u2019t have any other income, the Pension Credit effectively tops you up to the full State Pension anyway so if you\u2019re 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.”<\/p>\n","protected":false},"excerpt":{"rendered":"Some people may be unaware that they owe taxSome people may be unaware that they owe tax People…\n","protected":false},"author":2,"featured_media":158713,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,1267,474,1016,2499,16,15,961],"class_list":{"0":"post-158712","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-dwp","10":"tag-finance","11":"tag-hmrc","12":"tag-personal-finance","13":"tag-uk","14":"tag-united-kingdom","15":"tag-your-money"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114627631241412242","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/158712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=158712"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/158712\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/158713"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=158712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=158712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=158712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}