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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4414
Experience:  FCCA FCMA CGMA ACIS
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I took 2 lump sum pensions with 25% tax free om each. The larger

Customer Question

I took 2 lump sum pensions with 25% tax free om each. The larger one was almost 24,000. They took 6,500 in tax a large portion at 40% and even some at 45%, was told to reclaim from HMRC. Only other income, actually my husbands is Pension Credit which I was told is not taxable.(Approx 230 weekly). Just got calculation back from HMRC apparently they only owe me £214, but my taxable income was under 31,000? Can you help?Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. If your only other income is your husband's Pension Credit, how is he entitled if he has no income? In any event it is irrelevant as husband and wife are, in general, separate legal entities for Income Tax (IT). These big tax deductions can occur when taxable lump sums are received as they skew the PAYE system. HMRC have told you to reclaim any overpayment of tax at once. You do not have to wait until April. Just write to your tax office. Firstly though check HMRC's computation and if it is incorrect make an appeal, which you do by merely writing a letter. HMRC are very keen to make assumptions, in my experience invariably incorrect and always in favour of the Revenue! Your taxable income would comprise your salary, plus 75% for each lump sum received from pension liberation, and taxed at 20% for the first CBP 31785 and 40% thereafter. If your income exceeds 100K then you loose your personal allowance at the rate of a pound for every two quid over. If your income exceeds 150K then the rate rises to 45%. If your husband has unused personal allowance he can transfer up to GBP 1060 to you. I do hope that I have shown you a way forward in this matter.
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Customer: replied 1 year ago.
Thank you Keith, but sorry I guess maybe I haven't given you enough info. I already submitted P53 and received the calculation today.Would it help if I scanned the documents I sent to HMRC and their return calculations, on which they have based this calculation. I do not work or earn any money our only income is Pension credits.
Expert:  bigduckontax replied 1 year ago.
It would enable me to have a check for you. Thank you for your support.
Customer: replied 1 year ago.
Documents, sent hope you got them, Keith.
Expert:  bigduckontax replied 1 year ago.
First observation; what is the 4842 'other adjustment' plucked like a rabbit out of a hat in the first image? The tax deducted by Prudential is sheer gibberish; far too much tax has been deducted. Your letter won't come up at all! However your income tax position is: 36997 - 10600 = 26397 which at 20% is 5279. Take off tax already deducted 6528 [Prudential statement is so convoluted I cannot determine how much tax was taken off] leaves a refund of at least 1249 and possibly more.
Customer: replied 1 year ago.
Sorry Keith, I wrote back to this but cannot find where it has gone? It was with regard to 36997 as my income, I only had 17958.49 (from Pru) +1071(from standard life) + ? 6,400 25%tax free as income. Pension Credit is paid to hubby, not myself and I was told not a taxable benefit. No idea what the 4842.70 adjustment is, how can I query this? Rosneath is sort of Opposite Helensburgh yacht club ( over the water), Garelochead id about halfway between us an Helensburgh.
Expert:  bigduckontax replied 1 year ago.
Just write to the Pru and ask for an explanation. Yes I know where you are, but it is over 40 years ago since I sailed those waters.