Can I be asked to pay income Tax if on Pension Credit?

Snowedunder

Firstly, apoligies if this is in the wrong place.

On reaching 60 five years ago, I became eligible for State Pension. I also received a one of Pension from works Pension from which 33% was deducted prior to receipt for Income Tax.

Since then I have been on State Pension and Pension Credit, I am a single female living in rented accomodation. I am disabled and receive the higher rate DLA.

About 2 years ago I started receiving Income tax bills saying that I as 2 years' late with my payments. I queried this as I had never had to fill in a return for several years, so they sent me one which I completed and returned. I then received a tax bill in excess of £1000. I did some research on the internet from which I gleaned that I should not have entered my DLA as 'income' and further, being on the means tested Pension Credit I should not have to pay income tax on my State Pension.

I have queried this with the tax office, all I have received are further demands, increasing each year, and today have had a threat of debt collectors.

I have nil savings anywhere, and 'exist' on my benefits. Can anyone offer advice please.

Snowedunder

Sorry to bump this but my sister is in a terrible state and is threaten suicide, she cannot get to CAB, we have no local tax office as we live on an off shore island, and no family to turn too. Can anyone offer any advice please.

p00hsticks

I'm sorry that I can't help much, but didn't want to just leave you with no reply - hopefully someone with more knowledge will be along shortly, or you could try the following website, which is a charity designed to help people on low incomes with their tax queries;

http://taxaid.org.uk/

I assume that two different people (sisters) are posting under the same user name here ?

From my limited understanding, DLA is not a taxable benefit. The state pension is, but the pensioners tax allowance is usually more than enough to mean that no tax is due on it.

allen35

Reading the info' from HMRC website it seems you have 4 years to request a refund, contact taxaid tomorrow and send in the letter explaining the mistake anyway as it states below.


If they won't accept the explanation and To avoid further action from HMRC maybe request a repayment plan to pay back monthly instalments at an affordable rate. (Interest and penalties will be added whilst bill is outstanding)

You can always request discretion with recovery stating the hardship it would cause and explaining the circumstances on how the bill occurred.

Good luck with this and try not to worry too much.


Correcting mistakes after 12 months

If you want to tell HMRC about a mistake after 12 months, it's too late to amend your return. You have to write to HMRC and tell them about the mistake instead.
Getting a refund

In most cases, you'll get the tax you've overpaid back, as long as you claim it in time.
You must make a claim within four years of the end of the tax year that you're claiming for. For example if you paid too much tax in the 2006-07 tax year, you must make a claim by 5 April 2011.If you don't make a claim within the time limit you'll miss out on any repayment due.
You must make your claim in writing and it should include:

• the tax year it relates to
• why you think you've paid too much tax
• evidence of the tax that's been paid
• your signature
• how you would like to receive any repayment due

Sometimes HMRC may ask you for more information - to make sure that the figures are correct - before making a repayment.
For convenience you can have the repayment deducted from any tax due on your next Self Assessment Statement if either:

• it's less than £10
• a tax payment is due shortly

Or you can ask for one of the following:

• a repayment direct to your bank or building society account - this is quick and secure
• a cheque, however this will take a little longer to reach you

Mojisola

Contact AgeUK - https://www.ageuk.org.uk/ - or 0800 169 6565

They should be able to offer advice.

anmarj

the taxable income is State pension and the works pension, DLA and PC are not taxable, it may be that she has declared the PC as part of her state pension on the tax form without realising it, so she needs to get in touch with her tax office and query what income they have and how it breaksdown.

System

You need to find out what tax returns are outstanding and get them issued to you and when you do get help completing them rather than enter non-taxable income and get another tax bill.

You also need to ask for copies of the previous returns and then find out what income you entered which should not have been entered and submit amendments.

If you want face to face contact then you really should try to get an appointment at the nearest enquiry centre - http://www.hmrc.gov.uk/enq/main.htm

sleepless_saver

You could contact Tax Help for Older People, a voluntary organisation which provides help with tax if you are older and on a low income. They can provide a phone service if the don't have a volunteer in your area. The number is 0845 601 3321.

It does sound like you shouldn't be paying any tax, as your only taxable income is your state pension (you did say the work pension was a one off payment which was taxed at the time), and it can be sorted out once the info they have is corrected.

allen35

sleepless_saver wrote: »

You could contact Tax Help for Older People, a voluntary organisation which provides help with tax if you are older and on a low income. They can provide a phone service if the don't have a volunteer in your area. The number is 0845 601 3321.

It does sound like you shouldn't be paying any tax, as your only taxable income is your state pension (you did say the work pension was a one off payment which was taxed at the time), and it can be sorted out once the info they have is corrected.

I do hope this can be sorted.

Even though the mistake was over 4 years ago?

sleepless_saver

allen35 wrote: »

I do hope this can be sorted.

Even though the mistake was over 4 years ago?

I hope so too. I base my optimism on the fact that the OP did query, and continue to query, the request for tax when it was first made. This appears to have been 2-3 years after the first year they say she underpaid.

allen35

There is discretion to be used in this case i'm sure, i got a result today for a previous tax bill (SA) unpaid from 5-6 years ago where they have now agreed to monthly payments (unusual) and reduced all penalties and interest which i queried due to penalties being higher than the certain years total tax to pay.

I do hope OP gets assistance from tax aid or tax for older people orgs' to challenge the bill.