Widow's pension mis-reported the amount to HMRC and placed mum in high tax bracket

[Deleted User]

RascalFlatts said:

purdyoaten2 said:

The ‘system’ will presume that the first payment of the pension will be repeated throughout the rest of the year. So, for example, if the pension was to be paid at the rate of 12000 per annum and the first payment included two months arrears the first payment would be 3000. 

HMRC has no indication that 3000 would not be received every month henceforth and will try to collect the correct tax on all sources of income by adjusting tax codes. 

The easiest option is to access your mother’s personal tax account and simply adjust the expected income from the new pension to the correct figure. Alternatively she would have to speak to HMRC to rectify. (They will, of course, speak to you having gone through security procedures with her) Best time - 8am sharp !

That seems to be what happened. Yes, I updated the expected income amount (Thankfully, I'd already set her up with an online HMRC account a couple of months back). How quickly will they adjust the tax code based on my update? And, will the automatically refund my mum? I

The code will be adjusted in the next day or so. You need to make sure that the is no W1, M1 or ‘X’ after it. If there is tax will be applied using the allowances appropriate to each month until March without reference to the previous months in the tax year - in other words no refund. 

RascalFlatts

[Deleted User] said:

RascalFlatts said:

purdyoaten2 said:

The ‘system’ will presume that the first payment of the pension will be repeated throughout the rest of the year. So, for example, if the pension was to be paid at the rate of 12000 per annum and the first payment included two months arrears the first payment would be 3000. 

HMRC has no indication that 3000 would not be received every month henceforth and will try to collect the correct tax on all sources of income by adjusting tax codes. 

The easiest option is to access your mother’s personal tax account and simply adjust the expected income from the new pension to the correct figure. Alternatively she would have to speak to HMRC to rectify. (They will, of course, speak to you having gone through security procedures with her) Best time - 8am sharp !

That seems to be what happened. Yes, I updated the expected income amount (Thankfully, I'd already set her up with an online HMRC account a couple of months back). How quickly will they adjust the tax code based on my update? And, will the automatically refund my mum? I

The code will be adjusted in the next day or so. You need to make sure that the is no W1, M1 or ‘X’ after it. If there is tax will be applied using the allowances appropriate to each month until March without reference to the previous months in the tax year - in other words no refund. 

I'm glad you mentioned this. After I updated the estimate, they have switched the tax code, but to K34X and not the K34 which is was previously. I'm guessing the only way to resolve this is to ring them?

[Deleted User]

RascalFlatts said:

[Deleted User] said:

RascalFlatts said:

purdyoaten2 said:

The ‘system’ will presume that the first payment of the pension will be repeated throughout the rest of the year. So, for example, if the pension was to be paid at the rate of 12000 per annum and the first payment included two months arrears the first payment would be 3000. 

HMRC has no indication that 3000 would not be received every month henceforth and will try to collect the correct tax on all sources of income by adjusting tax codes. 

The easiest option is to access your mother’s personal tax account and simply adjust the expected income from the new pension to the correct figure. Alternatively she would have to speak to HMRC to rectify. (They will, of course, speak to you having gone through security procedures with her) Best time - 8am sharp !

That seems to be what happened. Yes, I updated the expected income amount (Thankfully, I'd already set her up with an online HMRC account a couple of months back). How quickly will they adjust the tax code based on my update? And, will the automatically refund my mum? I

The code will be adjusted in the next day or so. You need to make sure that the is no W1, M1 or ‘X’ after it. If there is tax will be applied using the allowances appropriate to each month until March without reference to the previous months in the tax year - in other words no refund. 

I'm glad you mentioned this. After I updated the estimate, they have switched the tax code, but to K34X and not the K34 which is was previously. I'm guessing the only way to resolve this is to ring them?

Yep. The original code was K34 - so no reason why an ‘X’ should be appropriate. With the ‘X’ the PAYE system will calculate the correct tax each month henceforth without regard to what has occurred previously in the tax year - so, no refund for any tax incorrectly deducted (except, of course, when HMRC get around to reviewing 2023/24 tax year, probably this time next year.