tax due on pension

S

selfbuild

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Hi,
Apologies if this has already been covered - I have done a search and not come up with any answers.

My Father (age 70) is retired (last 5 years) and is in reciept of both an occupational pension (from his service in a semi-state company) and the old age contrib. pension for both himself & my mother.

On reviewing his latest P60, it only shows income from his occupational pension, and the tax paid (NIL) from this pension - it does not mention his old age contrib. pension.

My question is should the old age contrib pension show on his P60 and if it does, how does e get it included?

Also, can someone tell me if this tax calculation is correct?

weekly income = 770 (occupational income + old age pension)
Taxed @ 20 % = 154 (standard rate cut off is 780 per week as per statement of tax credits)
Less Tax Credit 155 (as per his statement of tax credits)
Tax due -1 ..... therefore no tax is due?

Thanks in advance for your replies

SB
 
No, the old age pension should not appear on that P60. You receive a P60 for every employment you are in or in this case for every pension you are in receipt of. The exception to this rule being Social Welfare Pensions.

While there is, in most circumstances, tax due on Social Welfare pensions tax is not deducted in the normal manner. Most people who are in receipt of an occupational pension and a Social Welfare pension have their Tax Credit Certificate amended to reflect the Social Welfare pension.

Revenue have not enforced the letter of the law when it comes to the Old Age Pension. If people don't return the income they don't tend to chase it, naturally I'm sure there are people who have been audited etc..

I recommend that you contact the Department of Social Welfare and ask them to confirm how much your father will receive in 2008 (1 Jan - 31 Dec). When you've found this out contact the PAYE section of Revenue and ask them to issue an amended tax credit cert. reduce the standard rate cut off point by the income from the social welfare pension and also reducing the tax credits. They'll know how to do this. Then get them to issue the amended cert. to the pension fund (employer) on a cumulative basis from 1 Jan - 31 Dec.

For 2007, you should ask Social Welfare to send your father a statement of his income for last year and this fill in a Form 12. That way your father will be fully up to date.

No tax should arise.
 
If you ask Revenue to amend Certificate of Tax Credits on a cumulative basis your father may have a very large underpayment that will be deducted from his occpational pension in one lump sum. If this will cause unnecessary hardship ask Revenue to issue the amended certificate on a week one basis. Have your fathers most recent payslip with you when you call and they will work out the outstanding tax due and you can then decide whether its a cumulative :( or a week one cert :) that you want issued.
 
Thanks guys for your replies.

I will contact SW / Revenue as suggested and see what they say.

are Revenue usually pretty accommodating if there is a repayment of tax due (i.e. allow it to be paid in small chunks rather than one lump sum?)

Thanks

SB
 
I would be surprised if Revenue reviewed the prior years but if they did you can spread repayment of tax outstanding by reducing your tax credits by up to four years.
Again I would suggest a Week one cert for this year which Revenue would have no problem in issuing.
 
Just a comment re mothers portion of SW pension, will the revenue allow PAYE credit to the mother. Since Sept 2007 all new applicants for State Pension have the wife/QA portion of the pension paid directly to wife/QA.
I have received conflicting answers from revenue regarding the taxation of the QA portion
 
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