Tax, pensions and documentation!

Benefits, finances and funding
1

Hi all and thanks in advance for any advice you may be able to offer.

My wife retired from full time work in September 2017 and in this financial year became carer for one of my parents. She also has a part time job paying £6000pa.

My question is if she were to earn a further, for example £1000 or £2000, how much would she need to pay into a pension to avoid being taxed?

Also what documentation needs to be completed each year. Self assessment? How are the relevant authorities notified of the pension payments?

Also if you earn, for example £12k including the carers allowance, is NI payable on the carers allowance element.

Finally, and purely out of curiosity, what would happen in the following scenario;
A person earns £10k in the first month of the tax year and is then made redundant/fired/resigns and several months later applies to be a carer. Does the earlier payment prevent them from claiming the allowance or do payments made in the past not exclude them from claiming carers allowance.

Sorry for the long rambling post.

Cheers

Jay

2

Hi Jay … welcome to the canteen.

I’ll try to rearrange your posting to fit into the " Carer " element.

First , I assume she is under 65 and qualifies for Carers Allowance ?
Carer's Allowance: How it works - GOV.UK

Part time work … earnings limited to £ 117 per week ( Tax year ended April 2018 ) … £ 120
per week ( Tax year ending April 2019 ).

1p over and the WHOLE of Carers Allowance is lost.

Hence , many elect to contribute towards a pension with any " Excess " to avoid losing Carers Allowance.

Recent purge by the DWP on this :

https://www.carersuk.org/forum/support-and-advice/carer-disability-benefits/dwp-on-the-warpath-carers-in-the-frame-sweep-nets-11-000-caught-up-please-report-on-this-thread-34576?hilit=dwp%20purge

The usual P60 would suffice for Income Tax and DWP purposes.

If self employed , a different ball game :

https://www.litrg.org.uk/tax-guides/disabled-people-and-carers/caring-someone/tax-and-benefits-carers

If caught under Universal Credit , more considerations !

How Universal Credit payments work if you're self-employed - Home

As for paying tax , that question would need to be bounced off someone with knowledge of the
taxation system for a satisfactory answer … perhaps the Carers UK Advice Team … contact
details follow … best by email :

https://www.carersuk.org/forum/support-and-advice/carer-disability-benefits/how-to-contact-the-carers-uk-adviceline-24147

Husband and wife … the ability to marshall income and assets between each other to minimise the tax element ?

Same for NI and the pension questions … beyond us mere carers on this forum.

For all carers merely claiming Carers Allowance , NI contributions are made automatically to save any gaps when
calculating the potential , future , state pension.

What a person earned BEFORE claiming Carers Allowance is immaterial.

When I first claimed Carers Allowance over 20 years ago … a " Replacement Wage " … it was one eleventh
of my previous earnings !

Provided they stick to the earning limit afterwards , should be no problem.

I think that’s about it … let us know if there is anything further.

3

Chris,

Thank you so much for the fabulously detailed response.

I think you’ve answered all my questions.

You’re a genius.

Jay

4

Your welcome.

Having spent 20 odd years trying to extract blood out of a stone in respect of income , fiances does tend to sharpen one’s knowledge of lack of them ?

5

I’m back!

Another though although maybe this is one for the Helpline you highlighted.

Gov.UK says;

“The most common benefits that you pay Income Tax on are:” and then it states Carer’s allowance as one of these.

If carers allowance is approximately £3300pa you’d have to earn approx another £8500 to pass the tax free income threshold of £11850.

However, if you earned that you’d not qualify for Carers Allowance.

How comes?

What a ludicrously complex tax system we have.

Thanks again!

Jay.

6

Welcome to the wonderful world of the UK tax and benefits system.

What better example … no contestant has EVER chosen either as a specialist subject on Mastermind.

I wonder why ?

7

Conspiracy theorists would say it keeps accountants in a job!

8

The System does tend to look after it’s own.

Another classic example in carer circles … Care Act 2014 … so vague that it will keep lawyers in business for years to come !

The Street name for it … The Should / Could / Would Act !

9

I suppose it’s taxable in the case of my hypothetical example.

You could earn £10k in the first month of the tax year and start to claim Carers Allowance in the following months. You’d be eligible for Carers Allowance but the total at the end of the financial year would be over the tax free threshold.

10

Yep … good old Income Tax.

Threshold now so high that a carer jugging work with caring could earn £ 8,000 a year ( £ 153 odd a week ) , claim CA ( If that Earning Limit was raised ) and still NOT pay Income Tax.

However , full wack of Council Tax would be payable !

11

Two years of dealing with Brexit means nothing else has been prioritised.

Oh no, now I’ve nentiobed the ‘B word’

Cheers,

Jay

12

The Street name … The Hookie Cokey … not to be confused with the London Street Name for something else !