Question(s) about Form P55

JohnB47

Hi. The missus has been overcharged tax on her regular cash SIPP drawdown payments. We're now looking to complete Form P55 but here's the first question.

Bear in mind that my wife's only income, this tax year, has been state pension plus a tax free 25% of the SIPP, plus ongoing monthly SIPP drawdown amounts. She does not submit a yearly tax return - she asked for this to be stopped once she stopped self employment a couple of years ago.

In the P55 guidance, it says:

"About this form.

Use this form to claim back tax if the following applies:
• you’ve flexibly accessed your pension
• you’ve only taken part of your pension pot and will not be taking regular payments
• the pension body is unable to make any tax refund"

Are these 'and' conditions or 'or' ones? The first and last condition is true but second one is not true in our case - she has taken a tax free lump sum and is taking regular payments.

Does she still complete Form P55?

Thanks.

Albermarle

Yes I think so. However why has she paid too much tax when she is getting regular payments, as it should adjust itself month on month?  Normally the problem is when there is a one off payment. 

Hi. The missus has been overcharged tax on her regular cash SIPP drawdown payments. 

Some detail might help including any other income, and the tax code she has been given. 

Qyburn

The reason for the middle one is that regular payments can be sorted out through the tax code. Have you had a look at her HMRC online account to see what they have for the SIPP?  If she's not going to receive any more this tax year then I can't see any reason why P55 wouldn't be appropriate.

Dazed_and_C0nfused

But you don't need to bother with it if you don't want to.

HMRC will automatically refund any overpaid tax later this summer.

This may well happen before a P55 claim is worked!

dunstonh

Bear in mind that my wife's only income, this tax year, has been state pension plus a tax free 25% of the SIPP, plus ongoing monthly SIPP drawdown amounts. 

25% is not income.

As Albermarle says, if she is taking monthly payments, then she shouldn't be overcharged as the March payment (payment 12 in the payroll cycle)  would balance it up to the correct amount for the tax code.

JohnB47

Thanks everyone. When she started drawdown, she was allocated tax code 198L M1. It hasn't sorted itself out month on month. She has payed around £6 on each £200 monthly drawdown payment.

I've just looked at her Hargreaves Lansdown SIPP account to get that code and sure enough, there is a message about the month 12 drawdown payment and it says:

"Please note that HMRC sometimes use a special method of working out tax deductions, called a

'Month 1' basis. If this is applicable this will be shown at the end of your tax code as; M1.

With this method we are required to ignore all previous pay and tax in the year. HMRC will

sort out the final position with you at the end of the tax year."

Perhaps we'll not bother with the P55 then and as Dazed and Confused says it'll be sorted out automatically?

Edit: or perhaps, because she doesn't submit a Tax Return, the P55 will be needed?

dunstonh

"Please note that HMRC sometimes use a special method of working out tax deductions, called a
'Month 1' basis. If this is applicable this will be shown at the end of your tax code as; M1.

Month 1 basis is what used to be known as emergency tax.

However, HMRC normally notify the pension provider before the second payment is made.  i.e. your first payment is on Month 1 basis but future payments should have the correct tax code allocated to them.

Perhaps we'll not bother with the P55 then and as Dazed and Confused says it'll be sorted out automatically?It will in the end.  About 6 months after the closure of self assessment returns for 23/24.  So, around mid 2025

JohnB47

OK, thanks. In that case, bearing in mind the small amounts, we'll just let it all come out in the wash and won't bother with the P55.

Just checking though - will this all happen automatically even though she doesn't submit a self assessment tax return?

Albermarle

JohnB47 said:

OK, thanks. In that case, bearing in mind the small amounts, we'll just let it all come out in the wash and won't bother with the P55.

Just checking though - will this all happen automatically even though she doesn't submit a self assessment tax return?

If you do not do a SA return ( and most people do not) then her PAYE account will be automatically calculated around September/October, and any overpaid tax will be refunded.

Probably best to try and get this tax code changed to the correct one to stop it happening again. Normally by now she should have received her tax code notice for 24/25 . If so is it still the same ?

Dazed_and_C0nfused

Albermarle said:

JohnB47 said:

OK, thanks. In that case, bearing in mind the small amounts, we'll just let it all come out in the wash and won't bother with the P55.

Just checking though - will this all happen automatically even though she doesn't submit a self assessment tax return?

If you do not do a SA return ( and most people do not) then her PAYE account will be automatically calculated around September/October, and any overpaid tax will be refunded.

Probably best to try and get this tax code changed to the correct one to stop it happening again. Normally by now she should have received her tax code notice for 24/25 . If so is it still the same ?

Even if the same code is in use in the new tax year the pension payer would automatically change the basic of operation from non cumulative to cumulative when the tax year changes.

JohnB47

Albermarle said:

JohnB47 said:

OK, thanks. In that case, bearing in mind the small amounts, we'll just let it all come out in the wash and won't bother with the P55.

Just checking though - will this all happen automatically even though she doesn't submit a self assessment tax return?

If you do not do a SA return ( and most people do not) then her PAYE account will be automatically calculated around September/October, and any overpaid tax will be refunded.

Probably best to try and get this tax code changed to the correct one to stop it happening again. Normally by now she should have received her tax code notice for 24/25 . If so is it still the same ?

She hasn't received her 24/25 tax code. Neither have I actually. I'll post here when it comes in - soon, it seems.