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Taxation of UK state pension

14 July 2020 / Mike Warburton
Issue: 4752 / Categories: Comment & Analysis
24077
Pension problems

Key points

  • State pensions are taxed on an accruals basis.
  • Tax return guidance refers to entitlement to receive.
  • State pension entitlement for married women.
  • Purchasing added years and home responsibilities protection.

The state pension is in the news and creating a major headache for the government. It made a manifesto commitment that the triple lock – whereby the pension rises in line with the highest of average earnings growth inflation or 2.5% each year – would be maintained throughout the life of this parliament. Unfortunately this fails to work as planned when wages collapse under the coronavirus pandemic and then bounce back again. Even Steve Webb pensions minister in the coalition government and architect of the triple lock accepts that this must now change. So perhaps...

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