Civil service pension not activated in 2018, huge tax implications, have I the right form/s?

lesleyfromkent

I have a final salary pension scheme from working in the civil service.

I am 66 – and could have taken this when I turned 60 in 2018. I did not take it for physical and mental health reasons, and a spectacularly nasty divorce.

I left it “laying on”, it was/is about £8,000 gross pa. Not a huge amount, but still, worth having.

I have activated that civil service Pension now, at the point where I just hit state pension age, and I can work the computer without panic attacks that are too big.

I seem to have paid a huge amount of tax (over £15,000) and in addition my wages (from working 2 days at Waitrose as a cashier) have dropped from £700 pm to £370pm as they seem to think I am a higher-rate tax payer – so, the forms I am filling in (P55, plus I’m doing a self-assessment but it looks like I don’t need to) don’t seem to take into account that I was a long way below the income tax thresh-hold between 2018 and now (always been minimum wage plus £1 or so). Am I able to ask for this to be taken into account? Or have I just got to suck it up and pay Higher Tax on it all now until 5 April 2025?

The actual amounts were: (checked with HMRC today as I am getting very confused):

• A gross payment of £38,000 which, with £15,495 tax taken off at source, gave me a payment of £22,454 which shows on my bank statement. This seems to be the 5 years x £8k pa “lying on”.

• The 25% tax free cashed in of £40,256, which shows on the bank statement as that amount.

I am having difficulty getting my head around what I need to do to get back any tax I may be entitled to. I think I should pay an accountant, but this is the last money I have. To be used on making my home live-able in for my old age. I seem to be paying from my current wages as if I, on minimum wage + 50p currently, am a legitimate higher rate tax-payer!

Please be kind – I have a constellation of health problems and bad bad brain fog. I tried asking the civil service pension people for help and got multitudes of complicated emails which I couldn’t understand. So I gave up, cashed it in, and activated the rest. I am happy to live with the consequences of my actions, but I do need to do whatever is correct with HMRC.

Really, I only need to know if I’m doing the correct form (P55) which doesn’t seem to have anywhere to put in that I could have taken this in 2018 -or if I’ve missed the boat. I don’t mind, but I would really value your opinions.

Thanks in advance for your trouble.

Lesley

molerat

Do you have a breakdown of how much pension is attributed to each year ?

As this is "pension paid in arrears" it may be possible to get HMRC to assess it as paid in the years due and tax accordingly.  Not sure if "your choice" of not taking it would alter that though.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

Are you now also receiving your state pension ?

What tax code has now been allocated to your employment and the CS pension ?

Do you have access to your on line tax account ?

Marcon

lesleyfromkent said:

I have a final salary pension scheme from working in the civil service.

I am 66 – and could have taken this when I turned 60 in 2018. I did not take it for physical and mental health reasons, and a spectacularly nasty divorce.

I left it “laying on”, it was/is about £8,000 gross pa. Not a huge amount, but still, worth having.

I have activated that civil service Pension now, at the point where I just hit state pension age, and I can work the computer without panic attacks that are too big.

I seem to have paid a huge amount of tax (over £15,000) and in addition my wages (from working 2 days at Waitrose as a cashier) have dropped from £700 pm to £370pm as they seem to think I am a higher-rate tax payer – so, the forms I am filling in (P55, plus I’m doing a self-assessment but it looks like I don’t need to) don’t seem to take into account that I was a long way below the income tax thresh-hold between 2018 and now (always been minimum wage plus £1 or so). Am I able to ask for this to be taken into account? Or have I just got to suck it up and pay Higher Tax on it all now until 5 April 2025?

The actual amounts were: (checked with HMRC today as I am getting very confused):

• A gross payment of £38,000 which, with £15,495 tax taken off at source, gave me a payment of £22,454 which shows on my bank statement. This seems to be the 5 years x £8k pa “lying on”.

• The 25% tax free cashed in of £40,256, which shows on the bank statement as that amount.

I am having difficulty getting my head around what I need to do to get back any tax I may be entitled to. I think I should pay an accountant, but this is the last money I have. To be used on making my home live-able in for my old age. I seem to be paying from my current wages as if I, on minimum wage + 50p currently, am a legitimate higher rate tax-payer!

Please be kind – I have a constellation of health problems and bad bad brain fog. I tried asking the civil service pension people for help and got multitudes of complicated emails which I couldn’t understand. So I gave up, cashed it in, and activated the rest. I am happy to live with the consequences of my actions, but I do need to do whatever is correct with HMRC.

Really, I only need to know if I’m doing the correct form (P55) which doesn’t seem to have anywhere to put in that I could have taken this in 2018 -or if I’ve missed the boat. I don’t mind, but I would really value your opinions.

Thanks in advance for your trouble.

Lesley

P55 isn't the correct form - this is a defined benefit scheme you're talking about, and the P55 relates to defined contribution schemes.

The very good news is that because you were entitled to payment of your civil service pension at age 60, even though you received all the back payments in one lump sum and were taxed as if you'd received the whole lot in the same tax year, you can ask to have payments taxed on the year in which your entitlement arose. I'd start by writing to HMRC and simply say you would like the arrears to be spread back in accordance with the guidance given in HMRC's manual. They will probably come back and ask you for some more information (how much per year is the most likely), at which point you ask your scheme to give you the breakdown if they've not done so already.

It'll probably do your head in even further to read the following, but I've included it for completeness/for anyone else who'd be interested - you don't need to read it before contacting HMRC!

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam121160

hugheskevi

Just to add, MyCSP may well have enclosed details of the amount due for each past year. This is intended to be sent to HMRC where necessary to have the tax liability reallocated to the relevant year.

If such a form is not enclosed, then you can request it from MyCSP. It should be a fairly straightforward process to send those details to HMRC, and for HMRC to calculate the correct tax liability and issue a refund.

Marcon

hugheskevi said:

Just to add, MyCSP may well have enclosed details of the amount due for each past year. This is intended to be sent to HMRC where necessary to have the tax liability reallocated to the relevant year.

...and no need to worry about tax codes or anything else. It could take a little while to sort out, but shouldn't need much further input (if any) from you once you've ensured HMRC has the necessary breakdown.

hugheskevi said:

If such a form is not enclosed, then you can request it from MyCSP. It should be a fairly straightforward process to send those details to HMRC, and for HMRC to calculate the correct tax liability and issue a refund.

OP - you've said above that 'the pension people weren't very helpful', but if you haven't already been given the necessary breakdown, simply ask them for 'a breakdown of the amount of pension due for each past year which I can send to HMRC to have the tax liability reallocated to the relevant year'. If you do that by secure message or letter, it'll save you any confusing telephone calls.

lesleyfromkent

Thank you all soooo much for this valuable information. I've got my paperwork and will reply re all your points. But again, thank you soooo very very much. Its taken me a whole week to get it all to this point - and I could see that the questions on the forms didn't really match what was going on. Anyway - I will now reply separately.
Lesley

lesleyfromkent

molerat said:

Do you have a breakdown of how much pension is attributed to each year ?

As this is "pension paid in arrears" it may be possible to get HMRC to assess it as paid in the years due and tax accordingly.  Not sure if "your choice" of not taking it would alter that though.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

Are you now also receiving your state pension ?

What tax code has now been allocated to your employment and the CS pension ?

Do you have access to your on line tax account ?

molerat said:

Do you have a breakdown of how much pension is attributed to each year ?

As this is "pension paid in arrears" it may be possible to get HMRC to assess it as paid in the years due and tax accordingly.  Not sure if "your choice" of not taking it would alter that though.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

Are you now also receiving your state pension ?

What tax code has now been allocated to your employment and the CS pension ?

Do you have access to your on line tax account ?

Dear Molerat - thanks - and:
Breakdown of pension by year: not got that, I think others have said I can phone myCsp, which i will do.
State Pension: yes, its being paid regularly (4 weekly) since my birthday on 4 July.
  and I know that I will trip over the personal income thresh-hold re tax (just don't think I'm a higher-rater!)
Employment tax code = K9948 and later on M1.
Civil service pension tax code =BR M1.
I have only one piece of paper which says there won't be any more letter "if there are no changes in your annual ate, tax liability" [etc].
Online tax account - I think I have access, but the last time I tried the Government Gateway it took me 2 days and endless telephone calls. I told them then that my anxiety issues mean that, effectively, I cannot use GG.
Lesley

lesleyfromkent

Marcon said:

lesleyfromkent said:

I have a final salary pension scheme from working in the civil service.

I am 66 – and could have taken this when I turned 60 in 2018. I did not take it for physical and mental health reasons, and a spectacularly nasty divorce.

I left it “laying on”, it was/is about £8,000 gross pa. Not a huge amount, but still, worth having.

I have activated that civil service Pension now, at the point where I just hit state pension age, and I can work the computer without panic attacks that are too big.

I seem to have paid a huge amount of tax (over £15,000) and in addition my wages (from working 2 days at Waitrose as a cashier) have dropped from £700 pm to £370pm as they seem to think I am a higher-rate tax payer – so, the forms I am filling in (P55, plus I’m doing a self-assessment but it looks like I don’t need to) don’t seem to take into account that I was a long way below the income tax thresh-hold between 2018 and now (always been minimum wage plus £1 or so). Am I able to ask for this to be taken into account? Or have I just got to suck it up and pay Higher Tax on it all now until 5 April 2025?

The actual amounts were: (checked with HMRC today as I am getting very confused):

• A gross payment of £38,000 which, with £15,495 tax taken off at source, gave me a payment of £22,454 which shows on my bank statement. This seems to be the 5 years x £8k pa “lying on”.

• The 25% tax free cashed in of £40,256, which shows on the bank statement as that amount.

I am having difficulty getting my head around what I need to do to get back any tax I may be entitled to. I think I should pay an accountant, but this is the last money I have. To be used on making my home live-able in for my old age. I seem to be paying from my current wages as if I, on minimum wage + 50p currently, am a legitimate higher rate tax-payer!

Please be kind – I have a constellation of health problems and bad bad brain fog. I tried asking the civil service pension people for help and got multitudes of complicated emails which I couldn’t understand. So I gave up, cashed it in, and activated the rest. I am happy to live with the consequences of my actions, but I do need to do whatever is correct with HMRC.

Really, I only need to know if I’m doing the correct form (P55) which doesn’t seem to have anywhere to put in that I could have taken this in 2018 -or if I’ve missed the boat. I don’t mind, but I would really value your opinions.

Thanks in advance for your trouble.

Lesley

P55 isn't the correct form - this is a defined benefit scheme you're talking about, and the P55 relates to defined contribution schemes.

The very good news is that because you were entitled to payment of your civil service pension at age 60, even though you received all the back payments in one lump sum and were taxed as if you'd received the whole lot in the same tax year, you can ask to have payments taxed on the year in which your entitlement arose. I'd start by writing to HMRC and simply say you would like the arrears to be spread back in accordance with the guidance given in HMRC's manual. They will probably come back and ask you for some more information (how much per year is the most likely), at which point you ask your scheme to give you the breakdown if they've not done so already.

It'll probably do your head in even further to read the following, but I've included it for completeness/for anyone else who'd be interested - you don't need to read it before contacting HMRC!

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam121160

Dear Marcon thanks, and: [I think I'm not manipulating the reply function very well - bear with me!]
P55 - I did wonder.
I telephoned myCSP, and also the HMRC, and both said "you can claim back your tax using the P55" but when I actually completed it, it doesn't seem to relate to my current circumstances.
I have a "final contribution" scheme - I'm certain of that.
Is final contribution different to defined benefit and defined contribution? You seem to be saying it is - and here is the root of a lot of my problems, this is a complicated area!
So, I've got the P55 done. I will telephone HMRC tomorrow and tell them that, and also read them a letter I will write using your information. I'll get myCSP to provide the breakdown now as they are not very quick at this sort of thing (to get the p55 information from them I had to start copying in my MP - how stupid to have to go to this effort).
Your link - insomnia rules, I'll read it tonight.
Lesley

lesleyfromkent

Marcon said:

hugheskevi said:

Just to add, MyCSP may well have enclosed details of the amount due for each past year. This is intended to be sent to HMRC where necessary to have the tax liability reallocated to the relevant year.

...and no need to worry about tax codes or anything else. It could take a little while to sort out, but shouldn't need much further input (if any) from you once you've ensured HMRC has the necessary breakdown.

hugheskevi said:

If such a form is not enclosed, then you can request it from MyCSP. It should be a fairly straightforward process to send those details to HMRC, and for HMRC to calculate the correct tax liability and issue a refund.

OP - you've said above that 'the pension people weren't very helpful', but if you haven't already been given the necessary breakdown, simply ask them for 'a breakdown of the amount of pension due for each past year which I can send to HMRC to have the tax liability reallocated to the relevant year'. If you do that by secure message or letter, it'll save you any confusing telephone calls.

MyCSP have rarely sent me anything. So, unfortunately, I will have to contact them for breakdowns - which I shall do tomorrow (having stiff drink in a moment).
Worrying - thank for this, I'm not worried currently, but at 2am it might feel a bit different.....
Thanks for the phrase to use, I shall use it. That contact will be email, which I can manage (mostly).
Lesley

lesleyfromkent

Marcon said:

hugheskevi said:

Just to add, MyCSP may well have enclosed details of the amount due for each past year. This is intended to be sent to HMRC where necessary to have the tax liability reallocated to the relevant year.

...and no need to worry about tax codes or anything else. It could take a little while to sort out, but shouldn't need much further input (if any) from you once you've ensured HMRC has the necessary breakdown.

hugheskevi said:

If such a form is not enclosed, then you can request it from MyCSP. It should be a fairly straightforward process to send those details to HMRC, and for HMRC to calculate the correct tax liability and issue a refund.

OP - you've said above that 'the pension people weren't very helpful', but if you haven't already been given the necessary breakdown, simply ask them for 'a breakdown of the amount of pension due for each past year which I can send to HMRC to have the tax liability reallocated to the relevant year'. If you do that by secure message or letter, it'll save you any confusing telephone calls.

Dear Hugheskevi
Thanks for the reassurance. I really wondered about the P55 - it makes much more sense to write them a letter.
At least I now have a way forward that makes sense. It really didn't make sense to me earlier, and I would like this to be put to bed. 
Lesley

lesleyfromkent

Just finishing up for the evening - thanks again to you all. 
I have been looking at the string, and although I tried to reply to each of you, I do wonder if I have made a total dog's breakfast of it. 
Well, thanks again. I shall toast you all this evening, and post later with how it all turned out.
Getting old can be a pain, but supportive places like this make it easier.
regards
Lesley