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BT pension tax free lump sum and SA declaration?

Practical Issues
1nvest
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BT pension tax free lump sum and SA declaration?

#453650

Postby 1nvest » October 27th, 2021, 4:57 pm

Turned 60 this year and started receiving a pension from BT from way back (Section B) along with a lump sum that was indicated as being 'Tax Free'. Around £14K/year and £90K/lump respective type figures.

Where/how should that 'tax free' lump sum be registered (or not) on a Self Assessment?

Alaric
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Re: BT pension tax free lump sum and SA declaration?

#453652

Postby Alaric » October 27th, 2021, 5:09 pm

1nvest wrote:Where/how should that 'tax free' lump sum be registered (or not) on a Self Assessment?


There are no trick questions. Tax free means what it says and doesn't have to be disclosed. The monthly income will be taxed under PAYE so needs to be included as income received and as tax already paid if you are required to file a Tax Return.

XFool
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Re: BT pension tax free lump sum and SA declaration?

#453657

Postby XFool » October 27th, 2021, 5:24 pm

Alaric wrote:
1nvest wrote:Where/how should that 'tax free' lump sum be registered (or not) on a Self Assessment?

There are no trick questions. Tax free means what it says and doesn't have to be disclosed. The monthly income will be taxed under PAYE so needs to be included as income received and as tax already paid if you are required to file a Tax Return.

Ooh...

I remember all this from long ago, as through a glass, darkly (it was the 1990s).

I really don't know the current situation, so the tax 'form' and notes should give the details. If I remember, at the time, the "tax free" amount was capped at £30,000. You would need to check the details for today.

https://www.gov.uk/tax-on-pension/tax-free

swill453
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Re: BT pension tax free lump sum and SA declaration?

#453658

Postby swill453 » October 27th, 2021, 5:28 pm

XFool wrote:I really don't know the current situation, so the tax 'form' and notes should give the details. If I remember, at the time, the "tax free" amount was capped at £30,000. You would need to check the details for today.

Are you possibly thinking of the £30,000 tax free limit on redundancy payments?

Scott.

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Re: BT pension tax free lump sum and SA declaration?

#453662

Postby XFool » October 27th, 2021, 5:37 pm

swill453 wrote:
XFool wrote:I really don't know the current situation, so the tax 'form' and notes should give the details. If I remember, at the time, the "tax free" amount was capped at £30,000. You would need to check the details for today.

Are you possibly thinking of the £30,000 tax free limit on redundancy payments?

Scott.

Possibly! :)

I remember it all got complicated at the time - and at the time you could still go to your local Tax Office (and even they didn't know...). I do remember there was some matter of the relation between my redundancy (compulsory retirement: so redundancy payment + retirement lump sum) payment amount and the number of years I had actually been paying NI. The "tax free" amount was taxed above a certain level (£30,000?), but it had been "grossed up" so after taxation the net amount was the same to me as it would have been if it had all been untaxed. I did have to enter the details on a tax return, at the time.

Possibly this is all a distraction?

swill453
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Re: BT pension tax free lump sum and SA declaration?

#453663

Postby swill453 » October 27th, 2021, 5:39 pm

XFool wrote:Possibly this is all a distraction?

I think so, the question's already been answered.

Scott.

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Re: BT pension tax free lump sum and SA declaration?

#453727

Postby monabri » October 27th, 2021, 10:18 pm

You'll find HMRC will know all about your pension ( and you can confirm this by logging on to a government gateway account). If you do self assessment, the pension info will be automatically loaded into your self assessment form.

The tax free lump sum does not need to be declared as it is.... tax free.

1nvest
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Re: BT pension tax free lump sum and SA declaration?

#453741

Postby 1nvest » October 27th, 2021, 11:24 pm

Thanks for the replies.


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