Receiving lump sum state pension

runninglea

My mum is in a panic, for the 2018/2019 tax year she has received the following:-

1) April to July 2018 £4,200 pay from her job

2) Aug to 5/4/19 state pension

3) Dec 18 deferred state pension payment of £34,000

She is in a panic as in her words - she was expecting a letter to say how much tax is owed for last year.

Reading the hmrc gov website it states that tax is took off at source. She is convinced that no tax was taken?

When/how should she pay tax? Thank you

Dazed_and_confused

I think tax taken off the lump sum by DWP is either zero, 20% or 40% and is based on a form your mum would have completed. Not sure what happens if she didn't complete the form, possibly the 20%.

She may well be liable to tax on the lump sum but that depends on a few things,

How much State Pension was received in 2018:19?

Has she applied for Marriage Allowance for 2018:19?

How much taxable interest did she receive in 2018:19?

How much dividend income did she receive in 2018:19?

Interest and dividends may well be taxable at one of the 0% rates but can mean she is liable to tax on the lump sum.

runninglea

Thanks Dazed and confused

She received £5020 state pension, less than £100 interest and no dividends and no to married couple allowance

Dazed_and_confused

Based on your figures she has taxable income no more than £9,320 in 2018:19 so there would be no tax due on the lump sum (this isn't treated as normal income). And none due on her job, state pension or interest.

Your haven't missed a company/auto enrolment pension of some sort in payment in 2018:19?

Assuming not and no tax was deducted by DWP then HMRC have no need to contact her regarding 2018:19 (unless she paid some tax on the job and that hasn't been refunded yet).

If 20% tax was deducted then she will be in line for a nice refund of £6,800 later this summer.

runninglea

Thanks Dazed and confused

I have told her what you have said and she is going home to find the letter that was sent with the pension lump sum. She says that nil tax was taken which is therefore the correct amount.

Thank you very much