I seem to have come across a client (Over 65, married) who, until passing away in January, was paying Tax on his Pension income - state pension - (there was no private income).

From the papers I saw yesterday, his taxable income was £9477, and nett taxable, after allowances was £3377 - on that figure he had a bill for £768.81 for the year 2003/2004.

I've Not come across this before - had he got a private pension, that would have been taxed at source. Seems he was sent one of those self assessment forms - it does'nt seem right to me - as far as I can ascertain, his sole income was State pension and DLA, and one of those is'nt taxable.

Any ideas folks.............

At the risk of running in to a grandmother and eggs situation, I have found that TAXAID are a fount of knowledge, Wisdom and Guidance when I need help to sort out Tax Issues. Can be accessed by anyone on low income, advisers, or 'tax professional' working on a probona case.

www.taxaid.org.uk

Think they are based in Birmingham/West midlands area.

It is an unjoined-up world between IR and DWP. SRP is taxable. If you have another pension, this will be subject to PAYE and your code will be adjusted to collect tax on your SRP as well. If your only taxable income is SRP, and you get enough to pay tax - as increasing numbers do as SERPS kicks in - IR have a problem as DWP are not geared up to collect tax on SRP. So IR send you a self-assessment form and you have to make twice yearly payments to IR ( don't ask how this meshes in with the means test for PC!). I have raised this with DWP who have discussed with IR and concluded that this is in the "too difficult" category, so nothing will be done.

Thanks to NeilMc for the unsolicited endorsement for TaxAid! The problem of people on State pensions having to complete self assessment returns is one we are seeing more and more often. The Inland Revenue does a lot of work to take people out of self assessment - but, as previous respondents have noted, the DWP keeps adding pensioners in to self assessment because it doesn't pay pensions under PAYE. To endorse Alan's comments below - why not? It applies PAYE to incapacity benefits. And SERPS means a lot more pensioners are caught like this.

On the specific query, tax of £768 for 2003/04 on taxable income of £9477 looks high. If he had no other taxable income, and was 65 or over in 2003/04, the tax bill should be just under £400. (Or less, if dob before 6 April 1935). Mike, if you want to give me a call, the advisers' line for TaxAid is 0207 803 4950.