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Is tax paid on pension lump sum refunded through paye?
littlerock
Posts: 1,774 Forumite
I have a modest work pension taxed at 20% on the marginal amount after my personal sllowance. Last October I cashed in a modest pension pot from a brief spell of self employment. Of this 25% was tax free and I paid tax at a higher rate on 75% of the value of the pot, as IR rules assume that the pot is going to be a monthly pament and tax it accordingly.
I assumed that I would get a tax rebate under PAYE on this overpayment in this tax year as I normally only pay tax at basic rate and my pension pot did not push me into a higher tax bracket. For various reasons I have been late checking on this but now see I did not receive any rebate. My tax code for this year just shows my normal pension. The extra tax I paid on my pension pot seems to have disappeared into the system. Is this usual? Do I need to make a special claim to get back the extra tax?
I assumed that I would get a tax rebate under PAYE on this overpayment in this tax year as I normally only pay tax at basic rate and my pension pot did not push me into a higher tax bracket. For various reasons I have been late checking on this but now see I did not receive any rebate. My tax code for this year just shows my normal pension. The extra tax I paid on my pension pot seems to have disappeared into the system. Is this usual? Do I need to make a special claim to get back the extra tax?
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Comments
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I think that if you just leave it, they will correct it after the end of this tax year. I don't remember whether they send a refund or just adjust your tax code.
But you can fill in a P55 form to claim the refund, or phone them up, explain the circumstances and ask for it.
See https://www.gov.uk/government/publications/flexibly-accessed-pension-payment-repayment-claim-p550 -
Last October I cashed in a modest pension pot from a brief spell of self employment. Of this 25% was tax free and I paid tax at a higher rate on 75% of the value of the pot, as IR rules assume that the pot is going to be a monthly pament and tax it accordingly.
Therefore in tax year 18-19.
https://www.gov.uk/tax-overpayments-and-underpayments
If you have not paid the right amount at the end of the tax year, HMRC will post you a tax calculation. This can be a P800 or a Simple Assessment letter.
P800s are sent out after the tax year ends on 5 April. You’ll normally get yours by the end of November.
Or contact HMRC as above.0
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