Unpaid Tax advised as owing 12 months after retirement!

Davyp1

Help Please!

I retired from my work in July 2011 at the age of 68.
At this time I requested and completed a tax return as I anticipated a refund in respect of tax overpaid in that current year.

In response HMRC advised that I had underpaid tax to the sum of £3,513.42. The letter relating to this was received on the 5th June 3012. From this letter, I now understand that the underpayment came about because when I started to receive Statuary Pension at the age of 65 (Jan 2008) the HMRC had not taken this into consideration when calculating my PAYE tax code.
The amount owing being to difference in tax due to the higher bracket that the stat. pension put me into.

I have asked why it took three years and my eventual retirement for them to realize I owed this amount, but still await a reply to this question.

Meanwhile, I received a further letter on the 5th November 2012 requesting payment in full by the 29th November 2012 or that they will have to collect the tax by the self assessment system. also if I do not then pay the tax owing it will be subject to late payment charges and interest! To stop this happening I need to pay the amount in full or contact them by telephone.

My retirement plans did not include for the payment of such a debt and I would appreciate advise before settling. It obviously came about by an error on their part and I do wonder if I can be still held liable?

tanith

I would phone them ASAP and sort it out, if you do indeed owe the money then I'm sure they'll come to some arrangement so that you pay it back gradually.

jennifernil

Did you tell them at the time that you had started to receive this pension? Is this your State Pension?

State pension is always paid gross, but is taxable. if you had informed them then they would have deducted it from the code number for your job.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/57004979#Comment_57004979
might be worth a look.

Davyp1

jennifernil wrote: »

Did you tell them at the time that you had started to receive this pension? Is this your State Pension?

State pension is always paid gross, but is taxable. if you had informed them then they would have deducted it from the code number for your job.

It is my state pension.
I realize now that I should have told them at the time when I started to receive my pension when I started to receive it on my 65th birthday. Naive me thought that they would be informed automatically.
I do realise now that I have no alternative but to pay them.

johnfash

I would advice that you call them ASAP and mention to them that because this amount was not coded out (I.e. you did not pay it when you were employed) you do not have this sort of money freely available.

Ask them if you can pay this over instalments. Work out in your head what you can comfortably afford, but don't say something like £2 a week.

There will be interest charged on all outstanding amounts, but this is better than any interest you'd get from a lender.

Unfortunately the tax will still stand.