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Pension emergency tax repayment
Pension emergency tax repayment
Pensions: Tax overpayment of £1bn prompts reform call (26 April 2023)
https://www.bbc.com/news/business-65398736
"Changes to the pension system in 2015 allowed people to withdraw some of their defined contribution pension savings as an income from the age of 55, while leaving the remainder invested.
In doing so, some are charged at an emergency tax rate, which means they could temporarily pay thousands of pound more in tax than they actually owe.
To reclaim the overpaid tax, they need to complete one of three HMRC forms, which should mean money is returned within 30 days."
I took a lump sum and was charged emergency tax. 30 days not so bad...but how likely is that?
https://www.bbc.com/news/business-65398736
"Changes to the pension system in 2015 allowed people to withdraw some of their defined contribution pension savings as an income from the age of 55, while leaving the remainder invested.
In doing so, some are charged at an emergency tax rate, which means they could temporarily pay thousands of pound more in tax than they actually owe.
To reclaim the overpaid tax, they need to complete one of three HMRC forms, which should mean money is returned within 30 days."
I took a lump sum and was charged emergency tax. 30 days not so bad...but how likely is that?
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- Lemon Half
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Re: Pension emergency tax repayment
It hasn't really got anything to do "emergency" tax codes. It's just how PAYE works. Even if you have a pukka, accurate tax code for the current year, if you take a big pension payment early in the tax year you'll be over-taxed.
Last year they had some delays with processing P55 claims, but it seems to be better this year.
Yes I think there should be a way of flagging to the system that you're taking a lump sum and it's not an ongoing monthly income, but I've no confidence they'll fix it soon.
Scott.
Last year they had some delays with processing P55 claims, but it seems to be better this year.
Yes I think there should be a way of flagging to the system that you're taking a lump sum and it's not an ongoing monthly income, but I've no confidence they'll fix it soon.
Scott.
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- Lemon Quarter
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Re: Pension emergency tax repayment
They charged me at emergency rates for a payment taken on the 28th of March. Not much prospect of extra payments there!!!!
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- Lemon Quarter
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Re: Pension emergency tax repayment
JohnB wrote:They charged me at emergency rates for a payment taken on the 28th of March. Not much prospect of extra payments there!!!!
I was going to ask the question of tax on later payments, I expect to take my SIPP in a couple of years and was going to wait until end of March, I had suspected whenever the payment was taken then an emergency tax code would be actioned so thanks for confirming.
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- Lemon Quarter
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Re: Pension emergency tax repayment
kempiejon wrote:JohnB wrote:They charged me at emergency rates for a payment taken on the 28th of March. Not much prospect of extra payments there!!!!
I was going to ask the question of tax on later payments, I expect to take my SIPP in a couple of years and was going to wait until end of March, I had suspected whenever the payment was taken then an emergency tax code would be actioned so thanks for confirming.
It probably has to be an emergency code at outset given pension company are initially sitting with no tax code and likely await one from HMRC who likely do not know to issue until first payment. The cynic in me suggests notification to the pension company will take more than 30 days.
Also not convinced HMRC will by default then issue a cum code, last few years HMRC seem to have a habit of making mid year codes week one. (less work, I suspect). Accordingly if you do start in March do also examine what they do in the next tax year as well.
Re: Pension emergency tax repayment
swill453 wrote:Yes I think there should be a way of flagging to the system that you're taking a lump sum and it's not an ongoing monthly income, but I've no confidence they'll fix it soon.
Scott.
In my case there was a way. I'm not a UK resident. I put the double-taxation paperwork in motion back in March. HMRC confirm they received it in April. On the Double-Taxation Treaty Relief form is a place to enter the details of the pension scheme. HMRC had all they needed to issue the pension company with the correct tax code.
Another inefficiency - I received a letter from HMRC saying I am due a repayment of tax, and I will "shortly receive a P800 tax calculation". Why not run the P800 at the same time?
Re: Pension emergency tax repayment
HMRC have had their 30 days, and…nothing.
Am I right in thinking I will likely not get the refund this year? It’s important to me for US tax planning - our tax year is calendar year.
Am I right in thinking I will likely not get the refund this year? It’s important to me for US tax planning - our tax year is calendar year.
Re: Pension emergency tax repayment
AdrianC wrote:HMRC have had their 30 days, and…nothing.
Am I right in thinking I will likely not get the refund this year? It’s important to me for US tax planning - our tax year is calendar year.
Well, I was right in thinking that...no refund yet. I've called HMRC a couple of times. In December I was told the P800 was done December 4th and would hear within two weeks. Nothing. Called again this week, was told everything was good and a cheque would be mailed February 5th to my UK address. A cheque!
In the unlikely event that it really comes, can I have someone take the cheque to a branch of my UK bank? No need for me to sign anything? I'm in the USA.
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- Lemon Quarter
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Re: Pension emergency tax repayment
AdrianC wrote:AdrianC wrote:HMRC have had their 30 days, and…nothing.
Am I right in thinking I will likely not get the refund this year? It’s important to me for US tax planning - our tax year is calendar year.
Well, I was right in thinking that...no refund yet. I've called HMRC a couple of times. In December I was told the P800 was done December 4th and would hear within two weeks. Nothing. Called again this week, was told everything was good and a cheque would be mailed February 5th to my UK address. A cheque!
In the unlikely event that it really comes, can I have someone take the cheque to a branch of my UK bank? No need for me to sign anything? I'm in the USA.
Yes. If they have your account details they should be able to pay it into your account for you. I've had my Mum pay cheques in for me in the past as Lloyds no longer have branches in Scotland. I now use a bank of Scotland branch for my Lloyds banking.
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- Lemon Slice
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Re: Pension emergency tax repayment
Most banks require a preprinted paying in slip to deposit at a bank counter.
You might find one in the back of a cheque book.
The days of walking into the bank, filling in a blank paying in slip picked up in branch with a biro are long gone.
You might find one in the back of a cheque book.
The days of walking into the bank, filling in a blank paying in slip picked up in branch with a biro are long gone.
Re: Pension emergency tax repayment
I don't have a cheque book. I do see there is a way to print a form and send it through the post. I'll do that if sending someone else into the branch doesn't work.
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- Lemon Quarter
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Re: Pension emergency tax repayment
pochisoldi wrote:Most banks require a preprinted paying in slip to deposit at a bank counter.
.
Banks have had blank ones available in branch since at least the 1980s. You just need to fill in the correct details
AdrianC wrote:I don't have a cheque book. I do see there is a way to print a form and send it through the post. I'll do that if sending someone else into the branch doesn't
Do you have their banking app - most will allow you to take a photo of the checque and pay it in that way. Just get someone to whatsapp you a picture of it.
Paul
Re: Pension emergency tax repayment
Nationwide Building society - there is an app but it don't show up in the USA app store. I think I'll be OK. Sis-in-law will take it to the branch for me. Assuming it shows up, that is.
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- Lemon Slice
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Re: Pension emergency tax repayment
DrFfybes wrote:pochisoldi wrote:Most banks require a preprinted paying in slip to deposit at a bank counter.
.
Banks have had blank ones available in branch since at least the 1980s. You just need to fill in the correct details
I beg to differ. Barclays haven't had blank ones in branch for a long time.
Not that you need one when you deposit by machine.
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- Lemon Slice
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Re: Pension emergency tax repayment
pochisoldi wrote:DrFfybes wrote:
Banks have had blank ones available in branch since at least the 1980s. You just need to fill in the correct details
I beg to differ. Barclays haven't had blank ones in branch for a long time.
Not that you need one when you deposit by machine.
But that only works if it's your account you're paying into or have someone else's debit card.
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- Lemon Quarter
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Re: Pension emergency tax repayment
Gersemi wrote:pochisoldi wrote:
I beg to differ. Barclays haven't had blank ones in branch for a long time.
Not that you need one when you deposit by machine.
But that only works if it's your account you're paying into or have someone else's debit card.
Good grief, people are really milking this one, is it a slow pedantry day today
Go into the bank wth the payee account details scrawled on a post-it you've had tucked in your wallet for a couple of decades, go to the till, give them the details, give them the cheque, they enter the details, print out a slip for you to check, and cheque is scanned and credited to the account.
At least that's how HSBC did it when I took MrsF's VED refund in last month.
Paul
Re: Pension emergency tax repayment
AdrianC wrote:Pensions: Tax overpayment of £1bn prompts reform call (26 April 2023)
https://www.bbc.com/news/business-65398736
"Changes to the pension system in 2015 allowed people to withdraw some of their defined contribution pension savings as an income from the age of 55, while leaving the remainder invested.
In doing so, some are charged at an emergency tax rate, which means they could temporarily pay thousands of pound more in tax than they actually owe.
To reclaim the overpaid tax, they need to complete one of three HMRC forms, which should mean money is returned within 30 days."
I took a lump sum and was charged emergency tax. 30 days not so bad...but how likely is that?
Quoting my OP for context...
Oh ye of little faith! HMRC came through. Received a cheque this morning and sis-in-law was able to pay it into the bank for me. Took HMRC 4 months, so 4x the 30 days of the article, and of course, they didn't pay me any interest. Still, I'm happy
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