TAX AND YOUR BENEFITS
Are my benefits taxable?
Lump sum death grants are not taxable. All Local Government pensions are taxable but whether you pay tax depends on the amount of your pension and your personal circumstances, that is:
| 1 | Whether you are working or have any other income |
| 2 | Whether you have a lot of interest from savings |
| 3 | How old you are etc. |
If you are receiving a pension for the first time, then the tax office assumes that it is taxable, in full, at the basic rate - currently 20% - until you provide details of your personal circumstances.
Regardless of where your spouse/partner worked, the tax office which deals with your Local Government pension is:
HM Inspector of Taxes
Liverpool Riverside
(reference 428/M 1)
Regian House,
James Street,
Liverpool,
L69 9DB
Telephone: 0151 242 8000
How tax works
Money you receive or earn is called income and is subject to income tax, but everyone is allowed to receive a certain amount of income before tax is due. These are known as tax allowances and vary depending on your circumstances.
What counts as Income
Income can come from many different sources and in the main include:
- state retirement pension
- state widow’s pension
- occupational pension
- earnings from employment
- interest from investments and savings
- benefits received whilst registered unemployed or sick
Tax Allowances
Some allowances which may be given are:
- personal allowance – which everyone receives
- age allowance - if you are 65 or over and provided your income is below a certain level, the personal allowance is replaced by the age allowance which is greater
- Additional personal allowance - an extra allowance for those who are single and have children under 16 years.
The tax office needs to find out the full amount of your income and your personal circumstances so that they can determine your tax allowance. You provide this information by completing a tax form (P161).
