Wound-up pension lump sum, causes overpayment on Child Tax Credit!

QBSBuck

Hi guys,

whooo its the postman! Booo its a surprising request to repay £1000+ of overpayments. Really, really bad timing and I have to say I feel aggrieved about the circumstances. I'd be interested to hear your thoughts.

Basically I worked for BT for 3 years (salary circa £21,000, fresh out of university). Now last year...6 years later, after leaving, and moving into a different career, BT send a letter saying they are winding up the pension scheme. OK, fine. There is an option for a lump sum which will be most handy. The lumps sum is £12,000 (taxed at 25% ouch, so I only see £9000).

Now, I am always straight up with HMRC and tell them of my payrises straight away etc.

So I tell them of this completely unexpected mid-year payment and they immediately stop my Child Tax payments and log a £1650 overpayment for the year. That seemed harsh, but all is palatable as the following years projected £545 payment comes of the balance in due course.

Now I am working hard, going about my business, getting decent pay-rises in the ensuing year. And I cross the threshold, and my Child Tax Credits stop. Perhaps I should have expected the letter at this point, but I didn't, and now its here.

Basically, it doesn't seem fair to have money that was paid out to a pension fund when my salary was modest (21,000 - 26,000) then come back to smash me over the threshold and have such a detrimental effect to my finances. 12,000 lump sum, has become 9,000 (fair enough) and ultimately is now 7,400 compete with heartache.

Do I have any grounds for a dispute? Thanks for any contributions (not monetary lol).

xylophone

And I

cross the threshold,

Then you don't qualify for the benefit?

detrimental effect to my finances.

I'd have thought an unexpected lump sum of £7400 would have improved your financial position?

I can't see what you have to complain about.

QBSBuck

It most definitely did help that year.

This demand for payment has come atleast 1 year and half following, as recent pay-rises have pushed me legitimately over the threshold through salary. Rather than in the lumpsum year when the money (I earned in years when salary was well below the threshold) just pushed me over.

I don't want the 'benefit', I just am not happy to have to pay the overpayment back as the payments were made in good faith.

Its a weird system they run.

[Deleted User]

since when did BT wind up their pension scheme?

paddedjohn

I though that once pension was paid in it was locked in and you couldnt have it until you retired.

princessdon

If you bought your pension it's fair game! you had the option to leave it and chose not to

Enjoy your extra 7.5K though - more money than most of us will ever have as a windfall.

QBSBuck

woodbine wrote: »

since when did BT wind up their pension scheme?

paddedjohn wrote: »

I though that once pension was paid in it was locked in and you couldnt have it until you retired.

BT phased out the final salary pension for the one I was on, and then phased that out for an even more cost effective one for themselves. Winding it up. Presumably ongoing employees got the chance to join the new scheme.

Paddedjohn, I no longer work for them and as my pension contributions were less then 3 years I got the chance to take the lump sum.

QBSBuck

princessdon wrote: »

If you bought your pension it's fair game! you had the option to leave it and chose not to

Enjoy your extra 7.5K though - more money than most of us will ever have as a windfall.

I didn't have the option to leave it, I did have the option to transfer it to my own scheme of choice or lump sum.

I enjoyed my 9k, paid of some student debt. It is a windfall, but it is earned. The 1.5k is being extracted from me by the HMRC.

enabledebra

I'm a bit confused. Are you saying that you are unhappy with the tax year they have allocated the income to and want to know if it's correct?

princessdon

QBSBuck wrote: »

BT phased out the final salary pension for the one I was on, and then phased that out for an even more cost effective one for themselves. Winding it up. Presumably ongoing employees got the chance to join the new scheme.

Paddedjohn, I no longer work for them and as my pension contributions were less then 3 years I got the chance to take the lump sum.

So why do you want benefits? if you were unemployed and other benfits would you expect them to ignore it?

Tax credits ARE benefits - given to those that cannot support their own children. You are deemed for 12 months (it won't count next year) as being able to pay for your own children (ie not me paying for them). That is the case and is right, so why do you feel it is wrong?

Or do you feel I should continue to support and feed your children even with your extra cash?



Not being harsh by the way (I get you paid into this) just giving you the governments point of view). Fact is - I am paying in part to feed your children, you have money so the govt say, no he pays for his own children.

QBSBuck

I am unhappy that what amounts to pension savings made in years when my salary was much lower than the threshold would then count towards boosting me over the threshold and even worse to then owe money from that point forth.