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
-
VAT reduced on advance payment if customer cancels?
A subscriber to our newsletter wrote to us with a query. The business supplies a three-stage training course to students that fully pay (non-refundable) in advance for all three stages. If the students drop out before the end, can our subscriber partly reduce the VAT paid to HMRC on their return?
-
HMRC scrutinising directors’ loans
HMRC has begun a new compliance campaign targeting company directors who owed their companies money. What’s the full story, and how should you respond?
-
New two-tier mileage rates for electric vehicles
The amount that employers can reimburse staff for business travel in company cars changes from 1 September 2025. What are the new rates, and why is this update different to previous ones?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.