HMRC Estimated Earnings Incorrect for Pension Pay Out

Tessajb

Hi, HMRC have made an data entry error on my 2024/2025 Tax Account.  Instead on putting the full amount of payout as a one off annual, they inputted it as a monthly amount. Now this year 2025/2026 estimated earnings are stating £134,000 which puts me in the 45% tax bracket.

So when I queried this amount with HMRC today, that stated oh it will sort itself out when you submit your next Pension Drawdown!

But that means they will tax me at 45% and then i have to attempt a P55 form to claim back.

Me question is please, surely there is a process where they know they have entered information incorrectly, and can amend.  They say as the pension is not live i.e. closed they can't amend.  This seems very unfair and any help or advice on how to go through right channels to correct would be gratefully received.

Thank you in advance guys,

Tess

eskbanker

You can normally correct the expected income via your online personal tax account if there's an amount showing for the projected income from this provider, but I don't understand what's meant by the pension being closed - are you expecting income from it during 2025/26 or not?

Tessajb

Sorry for wrong terminology, I took the whole amount out of this small pension pot and the pension was then closed down.  No there is no income from this as I took the full amount in April last year.  HMRC processed it and tax was refunded as under my Tax Allowance. But they inputted the full amount i received as monthly not a one off full payment.

Nomunnofun1

Tessajb said:

Sorry for wrong terminology, I took the whole amount out of this small pension pot and the pension was then closed down.  No there is no income from this as I took the full amount in April last year.  HMRC processed it and tax was refunded as under my Tax Allowance. But they inputted the full amount i received as monthly not a one off full payment.

Simply put - at the time they could not have known it was a one-off payment. How could they? 

You may well have to be patient for an HMRC review.

Tessajb

Nomunnofun1 said:

Tessajb said:

Sorry for wrong terminology, I took the whole amount out of this small pension pot and the pension was then closed down.  No there is no income from this as I took the full amount in April last year.  HMRC processed it and tax was refunded as under my Tax Allowance. But they inputted the full amount i received as monthly not a one off full payment.

Simply put - at the time they could not have known it was a one-off payment. How could they? 

You may well have to be patient for an HMRC review.

Yew they knew it was a one off full payment, that's the error they admitted today, they put the full amount I received annually as a monthly figure.  I took £12,000 as full settlement HMRC have inputted I was receiving £12,000 a month, hence the £134,000 earnings bracket I am now in at 45% tax on any future pensions i might want to access.

Nomunnofun1

Tessajb said:

Nomunnofun1 said:

Tessajb said:

Sorry for wrong terminology, I took the whole amount out of this small pension pot and the pension was then closed down.  No there is no income from this as I took the full amount in April last year.  HMRC processed it and tax was refunded as under my Tax Allowance. But they inputted the full amount i received as monthly not a one off full payment.

Simply put - at the time they could not have known it was a one-off payment. How could they? 

You may well have to be patient for an HMRC review.

Yew they knew it was a one off full payment, that's the error they admitted today, they put the full amount I received annually as a monthly figure.  I took £12,000 as full settlement HMRC have inputted I was receiving £12,000 a month, hence the £134,000 earnings bracket I am now in at 45% tax on any future pensions i might want to access.

Yes - change the estimated earnings on your personal tax account from this source to NIL for 2025/26. 

Tessajb

Nomunnofun1 said:

Tessajb said:

Nomunnofun1 said:

Tessajb said:

Sorry for wrong terminology, I took the whole amount out of this small pension pot and the pension was then closed down.  No there is no income from this as I took the full amount in April last year.  HMRC processed it and tax was refunded as under my Tax Allowance. But they inputted the full amount i received as monthly not a one off full payment.

Simply put - at the time they could not have known it was a one-off payment. How could they? 

You may well have to be patient for an HMRC review.

Yew they knew it was a one off full payment, that's the error they admitted today, they put the full amount I received annually as a monthly figure.  I took £12,000 as full settlement HMRC have inputted I was receiving £12,000 a month, hence the £134,000 earnings bracket I am now in at 45% tax on any future pensions i might want to access.

Yes - change the estimated earnings on your personal tax account from this source to NIL for 2025/26. 

Sadly, HMRC have closed that Pension Fund Entry and its no longer live and they say they or me can't amend, which leaves me in a very difficult position this year... Does anyone know, how one gets this correct and through what channels.  

TheSpectator

What actually is your tax code?

Tessajb

TheSpectator said:

What actually is your tax code?

Hi,  K125 is my code for 2025/2026 period. Just looked at prvious years and its not showing.

eskbanker

Tessajb said:

TheSpectator said:

What actually is your tax code?

Hi,  K125 is my code for 2025/2026 period. Just looked at prvious years and its not showing.

What income stream is this showing against?  Tax codes are applied per income stream, so if that's against the one that no longer exists, then it's academic and won't actually be used, so do you have any actual 2025/26 projected PAYE income visible within your account?

Tessajb

eskbanker said:

Tessajb said:

TheSpectator said:

What actually is your tax code?

Hi,  K125 is my code for 2025/2026 period. Just looked at prvious years and its not showing.

What income stream is this showing against?  Tax codes are applied per income stream, so if that's against the one that no longer exists, then it's academic and won't actually be used, so do you have any actual 2025/26 projected PAYE income visible within your account?

When i log into my HMRC app in the PAYE section it only shows K125 and the Estimated earnings of £134,000.