Back-dated ill health pension taxed at 40%

janklmcdonald

After being off work through ill health and waiting nearly seven years to be considered for early retirement on health grounds I awarded my pension - back dated to when I last received a pay cheque.

However, HMRC has classed it as one year's income and they have marched off with 40% of it. It is not a large pension as I took time out when my children were young. However when counted up it takes me over the limit for the lower tax bracket.

This seems grossly unfair as I have had to exist without income during this time and I paid into my pension all the years I did work. I presumed they would estimate a fair tax rate for each year the money was given for and did not expect them to snatch nearly half of ot away. I have discussed it with an advisor at the tax office but to little avail. Any advice?

cyclonebri1

;) Boing,

Have you spoken to the tax office about this?, it doesn't appear correct, but I'm no expert.

Also, needs looking at as assuming you have been receiving benefits, IB for example, this pension payment may affect your previous entitlement.