Payment of pension arrears could mean tax bill
A large number of people have been underpaid their state pension. Payment of what's owing is underway but if you receive such a payment, it may give rise to an income tax bill. What's the issue?
The state pension arrears identified so far exceed £300 million, mainly older women and widows, although the Department for Work and Pensions has also identified some men who have been underpaid. Payments of the arrears began in 2021, and the exercise should be completed by the end of 2024. If you are affected by this, you may be contacted in the coming weeks by HMRC. The reason for this is that some of the underpayment may be subject to income tax, depending on your other income. The letter will explain what you will need to do. HMRC has confirmed that it will only collect income tax on amounts relating to 2023/24 and the previous four tax years. If you are dealing with the affairs of someone who died before they received a payment, no income tax will be payable.
Related Topics
-
Increase the IHT-free part of your estate by 50%
Your father died leaving his entire estate to your mother who later remarried. You’ll inherit some or all of her estate depending on whether she dies before her husband. What steps can be taken to reduce the inheritance tax (IHT) on the estate?
-
Class 2 NI problems to continue beyond summer
The problems with incorrectly charged Class 2 NI have been widely reported. HMRC has just released an update, and it’s bad news for affected individuals. What’s the full story?
-
How much will you save with reduced scale charges?
HMRC has reduced the VAT fuel scale charge by nearly 6% for company-provided cars. When does the new reduced rate take effect and how do you make the calculations?