23rd September 2015 at 11:03am
There is a common saying ‘the only two certainties in life are death and taxes’. However, the point about taxes is actually debatable!
The UK tax framework is set up to ensure, that for many transactions tax is paid up front, even if there isn’t any tax due, so there will be occasions you could be due tax back.
Freedom can be taxing
With new pension freedoms meaning people are now able to access their pension pots in a number of ways, they could be liable to pay some unneeded tax up front as a result.
One common reason this year relates to people who have taken a large payment out of their private pension. The tax basis used makes certain assumptions which may not be correct, for example, that you don’t have income from any other source, so you may in fact be due some of this tax back.
Unravel the red tape
Few of us like the thought of dealing with HM Revenue & Customs and bureaucratic red tape. However, it’s surprisingly easy and you don’t have to wait till the end of the tax year to claim – the only little bit that’s tricky can be identifying the correct form to use.
Finding your form
We thought it might be helpful to give you a head start by providing some links to the forms you may need:
• If you have taken your whole pension pot and don’t have any other pay-as-you-earn (PAYE) or private pension income, then you can complete a form P50Z. However, if you have other employment or pension income then you will complete a P53Z.
• If you want to take a large withdrawal or a series of ad-hoc withdrawals from your pension pot but without emptying it in this tax year then you would use form P55.
Gov.uk has a useful site which explains the different reasons and methods for reclaiming overpaid tax.
Christmas come early
If you use the appropriate form, HMRC will normally be able to send the overpaid tax back within around 5 weeks – in plenty of time for Christmas!