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Warning on tax liability as state pension rises

HMRC is writing to taxpayers who will incur a tax liability on their state pensions removing them from self assessment, but are providing no indication of how the tax will be collected, says Sara Bonavia, associate director at RSM

HMRC is causing confusion by removing taxpayers from self-assessment, raising the question of whether state pensions should be taxed at source.

We have seen a number of letters in recent weeks where HMRC has written to taxpayers to remove them from self assessment when there is no other mechanism to collect the tax. This is causing confusion and worry for individuals and can also stack up issues for the future. Should HMRC be collecting tax on state pensions at source as a way to mitigate this?

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