Untaxed pension

missbiggles1

This question is for my friend who doesn't have internet access at present.

From 2007 to 2011 she was living on her occupational pension which was always just under the personal tax threshold so she was paying no tax. In 2011 her SRP became payable but she has just realised that she isn't paying any tax on this, despite it taking her quite a bit over the threshold.

She realises that she's been remiss in not checking her tax notifications until we went through some papers together but she was also confused by the fact that, during this period, she received 3 tax refunds, rather than being told that she owed anything. I don't think either of us realised that it was up to the client to inform HMRC when the SRP became payable.

Obviously, she's going to contaxt HMRC to notify them of the situation but she's wondering what happens now. I've worked out that she should be paying about £1,800 pa tax and that her arrears will amount to about £6k. Can anybody give me any idea of what period they're likely to accept for repayments? Her total income is around £18 k and she'll be repaying a mortgage until she's 69, if that's any help. She's worried that she'll be expected to live on a very tight budget until the debt is repaid but I thought it likely that they'd be more lenient about it.

I'd be grateful if anybody could give me any information and advice to pass on to her.

jem16

missbiggles1 wrote: »

She's worried that she'll be expected to live on a very tight budget until the debt is repaid but I thought it likely that they'd be more lenient about it.

I'd be grateful if anybody could give me any information and advice to pass on to her.

HMRC will be far more lenient if she brings it forward to them. We can only hazard a guess as to how long they would allow the repayment.

Best advice is to contact HMRC asap.

antonic

As Jem16 has advised, your friend needs to be upfront & honest with HMRC with regards to this underpayment.

She may find that she gets charged interest & penalties for not notifying HMRC earlier.

Longest timescale they *may* agree to is up to 3 years, if they do agree a repayment plan make sure its in the agreement letter that all penalties & interest are frozen.

CLAPTON

is unusual for HMRC not to know about the state pension