In a welcome move, HM Revenue and Customs (HMRC) has issued a staggering £48.7 million in refunds between April and June last year for overpaid tax on pension withdrawals. This comes as a major relief to thousands of pensioners who may have paid more tax than necessary on their pension withdrawals.
According to HMRC, the average refund was worth around £3,800, providing a much-needed boost to the finances of many pensioners. This significant amount of refunds is a result of the government’s decision to increase the Personal Allowance, which is the amount of income you can earn before you start paying tax.
The increase in Personal Allowance from £11,850 to £12,500 in April last year meant that many pensioners were able to take advantage of the new tax threshold and claim back any overpaid tax on their pension withdrawals. This is because the tax-free Personal Allowance also applies to pension income, making it a great opportunity for pensioners to benefit from.
HMRC has been encouraging people to claim back any overpaid tax on their pension withdrawals by making the process simple and easy to follow. All you need to do is fill in the P55 form and send it to HMRC along with your P45 and details of your pension withdrawals. HMRC will then review your claim and issue a refund if you are eligible.
The increase in Personal Allowance has not only benefited pensioners but also other taxpayers. In total, HMRC has refunded over £2.6 billion in overpaid tax between April and June last year, with an average refund of around £1,500. This shows that the government’s decision to increase the Personal Allowance has had a positive impact on the finances of many individuals.
It’s important to note that you may also be eligible for a refund if you have taken a one-off pension payment or have flexibly accessed your pension in the past year. If you fall into this category, you can use the online service on the HMRC website to claim your refund. This service has been designed to make the process even more convenient for taxpayers.
The increase in Personal Allowance has been a significant step towards making the tax system fairer and simpler for everyone. It has not only provided much-needed relief to pensioners but has also helped boost the economy by putting more money in the hands of taxpayers. This has been particularly beneficial during these challenging times when many people have been facing financial difficulties due to the pandemic.
HMRC has been working tirelessly to ensure that taxpayers receive the refunds they are entitled to. They have also been reminding people to keep track of their pension withdrawals and report any changes in their income to ensure that they are paying the right amount of tax. This is a crucial step in avoiding overpaid tax and ensuring that the tax system works efficiently for everyone.
In conclusion, the £48.7 million in refunds issued by HMRC for overpaid tax on pension withdrawals is a positive development that has helped many pensioners. The increase in Personal Allowance has been a game-changer, providing much-needed financial support to individuals during these uncertain times. It’s important to take advantage of this opportunity and claim back any overpaid tax to ensure that you are not paying more than necessary.
