New data collected by HMRC show a 50% rise in taxpayers reclaiming overpaid Pension Tax in the second quarter of the year.
Thus, around 7,000 taxpayers in the UK are owed £3,363, based on average calculations, after HMRC overcharged on Pension Tax in the last three months alone, according to the latest figures. This represents a total of £33 million.
Experts have warned that this number could rise even higher since people who access one-off lump sums from their pension are taxed the same way as if it was a monthly income, which means they have been paying too much.
The Head of Retirement Policy at Quilter, Jon Greer, stated that HMRC will make an automatic repayment to all of those who are in this situation. However, anyone who wants to get it quicker should make a repayment claim, as the automatic payments take time to be processed and will only be available at the end of the tax year.
In the first quarter of 2022, HMRC repaid more than £22,000,000 to people who overpaid tax when they accessed their pensions, according to the latest government Pension Schemes Newsletter.
Why does this happen so often?
Usually, taxpayers are overtaxed when they try to take lump sums of cash from their retirement pot.
We know that pension rules allow people to take 25% of their pension cash from the age of 55, - without paying tax on it! - but many people are being taxed at "emergency" levels, which means they end up paying more than they should.
Although HMRC spots this overtaxing, as we stated before, the problem is that you have to wait until next April to have it back unless you claim to get it faster.
How to claim for overpaid pension tax
Under your circumstances, you will need different forms to claim your overpaid pension tax to HMRC.
- If you are retired and you have taken all your pension money - P50Z form;
- If you're still working and you have taken out some of the pension money - P55 form;
- If you're still working and you have taken all of your pension money - P53Z form.
If you don't feel comfortable making this claim on your own, we can help you!
Claiming your tax refund doesn’t need to be stressful.