Late mother over paid tax

Ivesyxyz

Hi, HMRC has recently written to me to tell me my mother had over paid tax on her pension.  The amount was around £500.

When I've checked, she only had her state pension (£13025.61) and works pension (£1620).  Tax should have been on earnings after the PA of around £450.  I'm confused why the works pension was deducting over £500 on a small pension of £1620.

I've literally just sent an email to the pension company to ask that question and I'll be calling HMRC on Monday, but I'm now wondering how long this has been going on for.

To the best of my knowledge she'd never had a refund before (certainly not in the last 3 or 4 years when I was keeping an eye) and why didn't HMRC send refunds before now? 

Is it the pensioners responsibility to ensure they are paying the correct tax when they've retired?

All very confusing and annoying as she struggled financially at times and could have done without paying more tax than she needed to!

Any help or advice would be greatly appreciated.

Flugelhorn

Dazed_and_C0nfused said:

Has she died?

Title of thread is "Late Mother ..."

Sarahspangles

Ivesyxyz said:

Hi, HMRC has recently written to me to tell me my mother had over paid tax on her pension.  The amount was around £500.

When I've checked, she only had her state pension (£13025.61) and works pension (£1620).  Tax should have been on earnings after the PA of around £450.  I'm confused why the works pension was deducting over £500 on a small pension of £1620.

I've literally just sent an email to the pension company to ask that question and I'll be calling HMRC on Monday, but I'm now wondering how long this has been going on for.

To the best of my knowledge she'd never had a refund before (certainly not in the last 3 or 4 years when I was keeping an eye) and why didn't HMRC send refunds before now? 

Is it the pensioners responsibility to ensure they are paying the correct tax when they've retired?

All very confusing and annoying as she struggled financially at times and could have done without paying more tax than she needed to!

Any help or advice would be greatly appreciated.

Sorry you’ve lost your mother.

Are you aware that the full personal allowance is available in the year that someone dies? It can result in a refund.

[Deleted User]

Ivesyxyz said:

Hi, HMRC has recently written to me to tell me my mother had over paid tax on her pension.  The amount was around £500.

When I've checked, she only had her state pension (£13025.61) and works pension (£1620).  Tax should have been on earnings after the PA of around £450.  I'm confused why the works pension was deducting over £500 on a small pension of £1620.

I've literally just sent an email to the pension company to ask that question and I'll be calling HMRC on Monday, but I'm now wondering how long this has been going on for.

To the best of my knowledge she'd never had a refund before (certainly not in the last 3 or 4 years when I was keeping an eye) and why didn't HMRC send refunds before now? 

Is it the pensioners responsibility to ensure they are paying the correct tax when they've retired?

All very confusing and annoying as she struggled financially at times and could have done without paying more tax than she needed to!

Any help or advice would be greatly appreciated.

The problem was that she was a taxpayer on her income from state pension alone (as many now are). HMRC would have issued a code number to her pension provider to reflect this. 

There is no point in contacting the pension provider who would only have applied the PAYE code as issued  by HMRC. 

molerat

Is it the pensioners responsibility to ensure they are paying the correct tax when they've retired?

Yes, it has always been the taxpayer's responsibility to ensure their taxes are in order

£13025.61 + £1620 = £14645.61 - £12570 = £2075 taxable so £415 tax at 20 %

There must be some other reason why they are refunding.  What was the tax code used on that pension, should have been something around K207.  The refund could be because she passed away mid year and did not use all her tax allowance.

[Deleted User]

molerat said:

Is it the pensioners responsibility to ensure they are paying the correct tax when they've retired?

Yes, it has always been the taxpayer's responsibility to ensure their taxes are in order

£13025.61 + £1620 = £14645.61 - £12570 = £2075 taxable so £415 tax at 20 %

There must be some other reason why they are refunding.  What was the tax code used on that pension, should have been something around K207.  The refund could be because she passed away mid year and did not use all her tax allowance.

I wonder if £13025 is the annual amount. That equates to £250 pw over 52 weeks

sheramber

Prior to her death, PAYE would be operated on the assumption that she would have  full annual income, as it does for everybody.
Her personal allowance woulkd be used on the basis of 1/12 against each months income.

But if she dies part way through the tax year she would only have part of that income bit a full year's personal allowance against it. So she would have a her full personal allowance allowable against the part year income to date of death.

As a result of that there is  a refund due of tax overpaid in the period to date of death.

SiliconChip

Did your mother have interest on savings? If she did and it was above the relevant allowances then it's possible that the tax due was being collected by the tax code on her works pension (it's what happens to me).

sheramber

SiliconChip said:

Did your mother have interest on savings? If she did and it was above the relevant allowances then it's possible that the tax due was being collected by the tax code on her works pension (it's what happens to me).

The tax due was on the amount of state  pension  that exceeded the personal allowance plus tax on works pension.