Tax year for deferred State Pension one-off arrears payment

JTBasketman

My wife reached State Pension age after 6 April 2016. She has deferred her state pension by 2 years. She can claim 12 months of the deferred pension as a one-off arrears payment. In which tax year would the tax for the one-off arrears payment fall, the year of the claim, or the year when the pension entitlements accrued?

As a side note, ChatGPT offers an opposite answer to the other AI sites I have tried. I haven't been able to find a HMRC definitive answer for State Pension Age after 2016.

Dazed_and_C0nfused

With post 2016 deferrals there is no arrears payment as far as tax is concerned.

The pension is taxable in the tax year she was entitled to it, not when it arrives in her bank account.

pinnks

If you backdate your claim by the maximum 12 months, that is the date from which the pension now starts and the date from which your entitlement begins for tax purposes. The single payment of 12 months of arrears from that date would be taxable in the tax year in which you would have been entitled to receive it. That now includes the deferral increments for the 1 year of deferral, of course.

LITRG

Hello. Our guidance page on tax on the state pension has information about backdating the claim for the state pension by up to 12 months: Tax on the state pension | Low Incomes Tax Reform Group

We also have a guidance on the subject of deferring the claim to the state pension for those who reach pension age on / after 6 April 2016: Putting off (deferring) claiming the state pension | Low Incomes Tax Reform Group

We hope this information is helpful.

JTBasketman

https://forums.moneysavingexpert.com/discussion/comment/82036866#Comment_82036866

Many thanks for all your helpful replies (sorry for the late response, I've been away), and you are all clearly saying the same thing. The LITRG site quotes:

"In such cases, the state pension will be taxed based on the year the entitlement arose, had the claim been made at the appropriate time. Therefore, using 1 October 2026 as in the above example, any state pension that would have you have been entitled to receive between 1 October 2026 and 5 April 2027 will be taxable in the 2026/27 tax year. Any amount due from 6 April 2027 will then be taxable in 2027/28."

Its a shame HMRC do not present this on their web pages and let their operatives know this (the nice lady I spoke to also said that the DWP would deduct the tax due at source). Also worth noting that 3 out of 4 AI systems answered it incorrectly, ChatGPT got it right.