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Two annuities, too much tax

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Comments

  • Don't forget you haven't got long to get the claim in for 2008/09, the earliest of the four years you can make a claim for.
    Table two - PAYE and other taxpayers outside the Self Assessment system

    Tax year you want to claim tax back
    Deadline to make your claim
    2004-05 year
    31 January 2011
    2005-06 year
    31 January 2012
    2006-07 year
    31 March 2012
    2007-08 year
    5 April 2012
    2008-09 year
    5 April 2013
  • Don't forget you haven't got long to get the claim in for 2008/09, the earliest of the four years you can make a claim for.
    I am aware of that deadline and I'm working towards it, but I had hoped to go back further. The following is a quote from this MSE Article
    "However, even if the deadline has passed for the tax year in question, don't let this put you off getting back what's yours. In certain circumstances - including when HMRC is at fault - your claim will be considered. So fight your corner."
    I wonder what certain circumstances might be relevent?
  • jem16
    jem16 Posts: 19,494 Forumite
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    Vortigern wrote: »
    Depends what you mean by 'set up'.

    Sorry I should have made that clearer. I meant crystallised - ie take an income from the annuity.
    Both annuities were taxed at basic rate until 2007 when annuities were moved to PAYE, at which time a tax code was allocated to the smaller annuity only.

    Do you know what instigated the change to PAYE? I'm assuming you mean that one was allocated an actual code that was using his personal allowance as technically using BR is PAYE.

    Was your father-in-law still completing SA returns?
  • xylophone
    xylophone Posts: 45,427 Forumite
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    Re guaranteed pension credit, are you sure that it is not worth applying?
    The minimum level of weekly income for a couple seems to be £217 and theirs seems to be only £202? (£5409 +£1400 +£3195 +£504 = £10508. Divided by 52 =£202?) (http://www.pensionsadvisoryservice.org.uk/state-pensions/pension-credit

    And presumably their savings income is diminishing either because they are spending capital or because interest rates are diminishing or both?

    Your father-in-law has heart problems - are these severe enough for him to need help with daily living? Would he qualify for attendance allowance?http://www.nhs.uk/CarersDirect/moneyandlegal/disabilitybenefits/Pages/AttendanceAllowance.aspx

    With regard to your father-in-law's tax affairs, did he not have to complete a form P161 for HMRC when he claimed his state pension? This would have put them on notice about the source of his income including the two annuities?

    When did your father- in -law stop completing tax returns?
  • Vortigern
    Vortigern Posts: 3,287 Forumite
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    jem16 wrote: »
    Do you know what instigated the change to PAYE?
    It was a change of policy at HMRC http://www.hmrc.gov.uk/pensioners/pension-retirement.htm
    Apparently all retirement annuities were taxed at basic rate until 2007 and he should have submitted a form R89 to receive the annuity without tax taken off - or reclaimed the tax. He did neither.:(
    I'm assuming you mean that one (annuity) was allocated an actual code that was using his personal allowance as technically using BR is PAYE.
    Your assumption is correct. Would HMRC have told PensionCo to use BR, or would PensionCo have used BR by default, until advised otherwise? I ask because BR does not appear on any of his notices of coding. His tax code was a very low 61L in 2007-8. This code based on his having income totalling over £25830 for that year. He had no such income! The code appears to have been corrected to 124L part way through the following year. He has no recollection of asking for the code to be corrected.
    Was your father-in-law still completing SA returns?
    He says he hasn't completed a tax return since he sold his business in 1984.
    Until then an accountant handled all his tax affairs.
    xylophone wrote: »
    Re guaranteed pension credit, are you sure that it is not worth applying?

    Thanks for asking. I wish I could get him on Pension Credit (Guaranteed Minimum) because he would then qualify for Council Tax Benefit and a fee-free POA. I checked the figures again. Firstly I must apologise for getting the state pension figures wrong earlier in this thread. I used last year's figures instead of this year's, which are 5688 husband and 3361 for wife. More significantly, the pension service do not consider the savings income to be £504pa. Instead they use a deemed, notional income based on cash in banks, building societies, etc. "If you have savings and investments of more than £10,000, we count £1 a week as income for each £500, or part of £500, you have above £10,000" On that basis he has deemed income of £74 per week

    I ran the correct figures through the PC calculator at http://pensions-service.direct.gov.uk/en/pension-credit-calculator/calculate.asp It said he might get 93p per week. This would be the Savings Credit part of PC, not the Guaranteed Minimum.
    And presumably their savings income is diminishing either because they are spending capital or because interest rates are diminishing or both?
    Both. They had been on a reasonable 5-year fix with no erosion of capital till July 2011 but then the interest rate dropped to 1.25%
    Your father-in-law has heart problems - are these severe enough for him to need help with daily living? Would he qualify for attendance allowance?
    Thankfully no, he would not qualify for AA. He's still quite independent.
    With regard to your father-in-law's tax affairs, did he not have to complete a form P161 for HMRC when he claimed his state pension? This would have put them on notice about the source of his income including the two annuities?
    He can't remember - He's been drawing state pension for nearly 20 years.

    Thanks all for your input. I'll let you know of any progress. HMRC say there's a 4-week lead time on dealing with correspondence.
  • jem16
    jem16 Posts: 19,494 Forumite
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    Vortigern wrote: »
    IWould HMRC have told PensionCo to use BR, or would PensionCo have used BR by default, until advised otherwise? I ask because BR does not appear on any of his notices of coding.

    In the absence of a P45 or P46 then yes the default would be BR until told otherwise by HMRC.

    If your father-in-law had informed them of his other annuity, then again BR would be used.
  • Vortigern wrote: »
    Thanks for asking. I wish I could get him on Pension Credit (Guaranteed Minimum) because he would then qualify for Council Tax Benefit and a fee-free POA.

    They don't have to be getting guarantee pension credit to get council tax benefit. So it's worth checking out their eligibility - http://www.turn2us.org.uk/benefits_search.aspx .

    I didn't know you could get fee-free POA if you have guarantee pension credit. Any chance of a source for that?
  • xylophone
    xylophone Posts: 45,427 Forumite
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    I didn't know you could get fee-free POA if you have guarantee pension credit. Any chance of a source for that?

    https://www.gov.uk/power-of-attorney/how-much-it-costs might throw some light.
  • Vortigern
    Vortigern Posts: 3,287 Forumite
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    They don't have to be getting guarantee pension credit to get council tax benefit. So it's worth checking out their eligibility - http://www.turn2us.org.uk/benefits_search.aspx .

    I didn't know you could get fee-free POA if you have guarantee pension credit. Any chance of a source for that?

    That benefits checker tells me "People with savings of more £16,000 can only claim Housing Benefit and Council Tax Benefit if they are in receipt of the guarantee element of Pension Credit." Thanks for trying.

    I see xylophone has answered your question about free POA
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