How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 5175
Type Your Tax Question Here...
bigduckontax is online now

In 2012-2013 tax year i received my lump sum state pension

This answer was rated:

in 2012-2013 tax year i received my lump sum state pension which had been deferred and I was still working. HMRC taxed on this lump sum at 20% at the time. Now they are saying the I should have paid 40% because by the end of that year my earnings had increased with bonuses. I have now retired and this came to light in the last few months and they are demanding nearly 6k from me. Do I have to pay this as it seems to me that it was their fault, not mine. I had worked for 20 years for the same company and always on PAYE.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Bad new I regret, you will most certainly have to pay something. You should check that the 6K calculation is actually correct. If it is not then write to the tax office concerned and appeal against the imposition.

Unfortunately, it is not their fault, but partly that of your employer who has clearly failed to properly operate PAYE when paying bonuses. The lump sum State Pension is another difficulty as it is paid gross and taxable. Did you complete a self assessment in that tax year?

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
I have never been asked for a self assessment until last year when I retired . HMRC then asked me to complete one for 2012-2013 which I did and included my state pension lump sum which had already been taxed at 20% when I received it. I have appealed

I am at a total loss to understand how your State Pension was taxed before receipt! However, you declared the position so you are in the clear. Just make sure that HMRC's computation is correct, which I see that you are already in the process of doing.

Thank you for your support.

Customer: replied 8 months ago.
I seem to remember when I asked for my lump sum that they told me it would be net of tax and that they also said it would be taxed at 20% which was my tax rate at that time. must admit I was shocked that it was taxed but as I was still working assumed that they were correct .

It all sounds suspiciously fishy to me! It is taxable however.

Customer: replied 8 months ago.
should they not have taken tax at source?

I wonder who taxed them, DWP does not usually and HMRC has nothing to do with the payment of pensions.

Customer: replied 8 months ago.
well, DWP definitely did and I am sure I have a letter from them stating how much the lump sum was and how much I would receive after tax so surely DWP and HMRC must have communicated.

All I can say is that it is most odd. Still it's water under the bridge now.