Indo - "Revenue is chasing tens of thousands of pensioners over owed tax"

I know they aren't doing a return but my point is that revenue have the data. Or at least I think they have.

So the employer (pension scheme) operates paye and revenue also know that they have a state pension. So it’s more likely than not that tax is due. I don’t think it’s a big deal to get the letter… but I’m not 90 with a poor grasp of tech,

If the letter invites them to do a return, online, that’s a headache. If the letter calculates the possible tax due.. state pension per teh dsp X marginal rate .. would that be easier? I don’t know. Either would make my dad freak
 
Thankfully my dad is only in receipt of a civil service pension and a few bob in interest from state schemes. We have organised his online return and med 1 claims… the med 1 being the driver there!

Some OAPs might be scared of a tax return but they love the auld Med 1 claims. That and VHI reimbursements. I think there’s a market for a service for medical relief claims for pensioners.
 
The article says:
State pensions are paid gross and no tax is deducted at source, but if a person also has an occupational pension, they owe tax on the state payment.
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But Revenue say:

Taxation of Department of Social Protection pensions

This page outlines how pension payments from the Department of Social Protection are taxed
www.revenue.ie www.revenue.ie
The DSP gives Revenue information on the taxable amount of these pensions.
...

If you are a PAYE taxpayer​

We reduce the annual tax credits and rate band on your Tax Credit Certificate (TCC) to take account of the pension.
Click to expand...
So, other than, perhaps, these pensions and self-assessed individuals, how does any discrepancy arise?
Please note, the DSP do not give Revenue information regarding the following pensions:
  • Blind Pension
  • Death Benefit Pension
  • Widow's, Widower's or Surviving Civil Partner's (Non-Contributory) Pension.
How the tax on social welfare pensions is collected depends on whether you are a Pay As You Earn (PAYE) taxpayer or self-employed.
Click to expand...
I know that when I received Illness Benefit for several months a while back my tax credits on my Revenue myAccount were automatically reduced to account for this income.
 
So it is reflected in MyAccount. I thought it was. So revenue have the data from DSP.

I can see where there are pensions from a few sources, including overseas for instance, some tax might be owed but the usual vanilla situation where you’ve occupational and state only should not be an issue.
 
My dad owes tax every yr which causes him stress. He is still working on a small income at age 72, receives a small private pension & the state pension. My mam receives only the state pension. The tax he owes seems to be on the state pension part. In total they earn roughly 70k. Revenue just keep adjusting his credits every Yr I do a tax return to claim back the tax owed.
I'm presuming this will continue until he stops working or has anyone any advice? I have sent an enquiry every year, asked them to adjust credits to take account of the 3 incomes but do I need to do something different?
 
Annieindublin said:
I think the tax free allowance cert (whatever it’s called now) can be adjusted.
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As I already posted above...

Taxation of Department of Social Protection pensions

This page outlines how pension payments from the Department of Social Protection are taxed
www.revenue.ie www.revenue.ie
The DSP gives Revenue information on the taxable amount of these pensions.
...

If you are a PAYE taxpayer​

We reduce the annual tax credits and rate band on your Tax Credit Certificate (TCC) to take account of the pension.
Click to expand...
 
It's not that complicated, as @ClubMan points out. The tax credits are adjusted to take into account any state payment.

Though I'm currently dealing with one issue for a relative, where Revenue have somehow got the notion that the relative is in receipt of both a contributory and non-contributory state pension and have adjusted tax credits accordingly. This only happened recently when relative noticed a sudden drop in net income from private pension.
 
My 95 year old parent is stressed enough as it is... and unable to manage her own affairs
..... if she gets such a letter from Revenue, it will finish her off.

Why dont Revenue go all out.... a level 3 intervention letter ... it would have the same effect on a lot of older people.
 
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I think that the DSP and Revenue could do a bit more to educate people on this. And I don't see why the DSP couldn't be responsible for deducting and remitting taxes on the State Contributory Pension. Every employer and every private pension company in the country take responsibility for doing it. In my experience it's not very well known that, while the State pension is taxable if your total income is over taxable limits, the DSP do not and will not deduct any tax from it so it's up to you to sort that out.

Picture this example: -

  • Bill works for 45 years in three different jobs. Each employer deducts and remits his taxes and Bill doesn't need to do that.
  • He has some of his savings on deposit and some years he even gets interest on the savings. The bank deducts and remits DIRT tax and Bill doesn't need to do that.
  • He puts some of his savings in an Investment Bond with a life company. The life company deducts and remits Exit Tax tax and Bill doesn't need to do that.
  • When he retires the pension company deducts and remits taxes from his pension from his occupational pension scheme and Bill doesn't need to do that.
  • BUT when he gets his State Contributory Pension, the DSP pay that to him gross, without any deductions, even though the combination of his occupational pension and State pension mean that it's taxable.
I can see why Bill might mistakenly assume that his State Contributory Pension is tax-paid like everything else.
 
Dave Vanian said:
I can see why Bill might mistakenly assume that his State Contributory Pension is tax-paid like everything else.
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But that's the thing. Isn't it effectively the case that the automatic reporting from DSP to Revenue of the pension paid and the concomitant reduction of tax credits by Revenue takes care of the tax liabilities in most cases?

Indo - "Revenue is chasing tens of thousands of pensioners over owed tax"

I know they aren't doing a return but my point is that revenue have the data. Or at least I think they have. So the employer (pension scheme) operates paye and revenue also know that they have a state pension. So it’s more likely than not that tax is due. I don’t think it’s a big deal to get...
www.askaboutmoney.com
 
ClubMan said:
Isn't it effectively the case that the automatic reporting from DSP to Revenue of the pension paid and the concomitant reduction of tax credits by Revenue takes care of the tax liabilities in most cases?
Click to expand...
I think indeed it does.

The article says:

State pensions are paid gross and no tax is deducted at source, but if a person also has an occupational pension, they owe tax on the state payment.…..
The tax authority said that where individuals were employed or receive occupational pensions, income tax would be deducted at source under the PAYE system.
It said taxable payments from the Department of Social Protection were made gross to the recipient, and Revenue would be notified by the department where an individual gets such a payment.
Click to expand...

This is next to impossible to reconcile with what is on Revenue’s website which you point out says:

If you are a PAYE taxpayer​

We reduce the annual tax credits and rate band on your Tax Credit Certificate (TCC) to take account of the [contributory state] pension.
Click to expand...

I suspect the 68,000 are only self-assessed (ie non-PAYE) over-65s whose credits and bands aren’t automatically adjusted like the majority who are PAYE.

As on anonymous pseudonym I have a rule about not criticising people who write under their real name but I know he lurks so if you’re here Charlie give us a wave!
 
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