paying tax on pension small lump sum

karwil

Hello i need some advise. My husband gets PIP and i get carers allowance for looking after him and income support. if im correct the only taxable benefit we get is carers allowance (Is that right)? i have also just taken a small lump sum from my pension  which in total is only £10,888.50 and they have taken £1633.26 off that amount giving me a sum of £9255.24, and that closes the pension down .My question is should i be paying any tax on this? they also sent me a P45 which i thought you only had that when you finish in a job and you pass it onto your new employer, which is strange because i haven't been able to work since 1994 due to having children and then ill health but then my husband was and is unable to work due to health issues. is there anyone out there that could help me please.  i have tried the HMRC site but i cannot get pass the questions about verifying my ID because they are asking for a valid passport number which i don't have, then a credit agency  which is fine i ticked that but then for some reason they are asking for a Northern Ireland driving licence number but i live in South wales and i cannot get any further. I have tried getting on the WEBCHAT but no luck with that either.
HELP 

poppy12345

Yes, Carers allowance is taxable income. I can't help with the tax question and for this maybe posting on the cutting tax part of the forum would be better.

Although the lump sum you've received from your pension will also be classed as savings and you need to report this to DWP. Savings of more than £6,000 will reduce your means tested benefits by £1 for every £250 (or part there of) over that amount. All changes must be reported.

kuratowski

For the tax, without the full figures it is hard to say with certainty.  But if your sole taxable income was carers allowance plus 75% of this pension pot, then it would all be covered by the standard personal allowance.  If there was an overpayment of tax, then you will probably need to request a refund using form P53Z.

Here is the PDF form you can print out and fill in if you can't access the online version

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/975390/P53Z_2021.pdf

As poppy said, post again on the cutting tax or pensions & retirement boards if you get stuck.

molerat

That tax amounts to 20% on 75% of the total taken so a trivial commutation lump sum.  Tax law means the pension provider must tax at 20% and provide a P45.  Taking the lump sum has added £8166.37 to your taxable income for the year. Completing the form mentioned above will get you a refund of any overpaid tax.  Remember to include any taxable benefits when filling in the income boxes, the form is pretty straightforward.

karwil

thank you for all your comments.  i have filled in online tax refund form and i have included the carers allowance which is tax able. due to the fact that we only receive carers allowance which is taxable we are well under the £12500.00 the £8166.37 plus carers allowance is still under the standard  taxable amount. Again thank you