Recently bereaved. Tax credits now less than before spouse passed.

Railwayguy

I lost my spouse last November. I am a PAYE worker and now receive the contributory pension. I got a bit of a shock when I saw my revised tax clearance cert for 2020!

We were always treated separately for tax purposes.

I can understand why my lower rate of tax was lowered by the pension amount for the year, ensuring that I pay the required 40% on the additional revenue.

What I don't understand is why my tax credits were cut as well.

Previously I received the personal and employee credits.

Personal: 1650 Euros
Employee: 1650 Euros

As my spouse passed away last November, I am now into the second tax year following bereavement so my personal credit increased to 2190 Euros, which I expected.

What doesn't make sense to me is that my tax credits were significantly reduced because of the contributory pension which I am already paying 40 percent tax on. Now my tax credits are

Personal: 2190
Employee: 1650

Minus Pension: 2168.40

Net credits: 1,702.25 which is less than I received (3,300) before bereavement. Surely this isn’t correct or am I missing something here?

Confused!!

Tefral

Firstly, i am sorry for your loss. Not a nice thing to have to go through so condolences.

Were you jointly assessed? If so, if you were the primary earner you would have received your wife's portion of tax credits that could be transferred to you. Now that she is no longer with you, you don't have her credits.

That's what i am reading into it anyway. i could be wrong.

Railwayguy

Hi there, thank you. We were separately assessed (I edited the OP to reflect that). That's what is so confusing to me and waiting nearly a month for each reply via revenue online is time consuming to say the least!

Addle

Railwayguy wrote: »

I lost my spouse last November. I am a PAYE worker and now receive the contributory pension. I got a bit of a shock when I saw my revised tax clearance cert for 2020!

I can understand why my lower rate of tax was lowered by the pension amount for the year, ensuring that I pay the required 40% on the additional revenue.

What I don't understand is why my tax credits were cut as well.

Previously I received the personal and employee credits.

Personal: 1650 Euros
Employee: 1650 Euros

As my spouse passed away last November, I am now into the second tax year following bereavement so my personal credit increased to 2190 Euros, which I expected.

What doesn't make sense to me is that my tax credits were significantly reduced because of the contributory pension which I am already paying 40 percent tax on. Now my tax credits are

Personal: 2190
Employee: 1650

Minus Pension: 2168.40

Net credits: 1,702.25 which is less than I received (3,300) before bereavement. Surely this isn’t correct or am I missing something here?

Confused!!

It’s how they collect tax on your pension.
It’s not taxed at source like paye income is.
Sorry for your loss. A nuisance to have to deal with such practicalities when it’s so fresh.

Railwayguy

Addle wrote: »

It’s how they collect tax on your pension.
It’s not taxed at source like paye income is.
Sorry for your loss. A nuisance to have to deal with such practicalities when it’s so fresh.

Thank you. Problem is they have already reduced my lower tax band to cover the tax due (40%) but also cut credits which should mean I end up paying more than 40% tax paid on the pension. I guess I'll know when I get my next pay check as I only got the revised cert today. I'll post back here and report on what the story is. Hopefully this thread will help anyone else going through this in the future.

Addle

Railwayguy wrote: »

Thank you. Problem is they have already reduced my lower tax band to cover the tax due (40%) but also cut credits which should mean I end up paying more than 40% tax paid on the pension. I guess I'll know when I get my next pay check as I only got the revised cert today. I'll post back here and report on what the story is. Hopefully this thread will help anyone else going through this in the future.

Tax paid between pension and pay should still total correct though.

Is there a widower/widows tax credit?

Railwayguy

Addle wrote: »

Tax paid between pension and pay should still total correct though.

Is there a widower/widows tax credit?

Yes the personal tax credit is increased to 2190 but then wiped out by the reduced credits of 2168.40 which leaves me with less credits than before the bereavement.

I have a feeling they have screwed up but can't confirm until I see my next pay check.

Addle

They haven’t screwed up.
It’s how tax on your pension is collected.

relax carry on

Railwayguy wrote: »

Thank you. Problem is they have already reduced my lower tax band to cover the tax due (40%) but also cut credits which should mean I end up paying more than 40% tax paid on the pension. I guess I'll know when I get my next pay check as I only got the revised cert today. I'll post back here and report on what the story is. Hopefully this thread will help anyone else going through this in the future.

Condolences on your loss. Both the tax credits and rate band are reduced by the taxable benefit you are receiving in order to collect the tax due on that element. What you are seeing is correct.

IRtax

Addle wrote: »

They haven’t screwed up.
It’s how tax on your pension is collected.

This is correct. The pension is taxed at 20% using up your cutoff and your tax credits before your other income.

IRtax

Addle wrote: »

They haven’t screwed up.
It’s how tax on your pension is collected.

This is correct. The pension is taxed at 20% using up your cutoff and your tax credits before your other income.

Railwayguy

many thanks guys. appreciate the feedback.