Is tax paid on pension lump sum refunded through paye?

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?

Comments

  • 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-p55
  • xylophone
    xylophone Posts: 44,336 Forumite
    Name Dropper First Anniversary First Post
    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.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.8K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards