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Pensions and Tax

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craft1948 | 12:02 Thu 21st May 2009 | Personal Finance
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I recently sent off a letter to the Inland Revenue claiming a refund for overpayment of income tax in the last financial year. They have rung me this morning and agreed that I am due a refund (due to my private pension provider using an incorrect tax code). However it is not quite as much as I had stated due to a difference in the amount of state pension paid , stated in DWP records. I am paid state pension 4 weekly and gave the total received up to the 20/3 as the last payment for the tax year - my next state pension payment was received 17/4 after the end of the tax year. However, they have added another 2 weeks on for tax purposes, saying that although I hadn't received it , it was due in the last tax year. How can they do this...if I was self-employed and did a job the first week in April but wasn't paid it until the third week in April that would go into income received the next tax year. I aren't bothered about the small amount of money involved I just can't understand the priciple behind the DWP statement.
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I guess it's because the State Pension is regarded as a Weekly remuneration, and your electing to receive it monthly is not "recognised" by HMRC. Does seem a bit anachronistic, but it's hard to argue with these bureaucrats. Just remember to make sure at the end of this tax year that the current year's income when declared doesn't include the two weeks they've put into last years.
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thanks Canary I'm glad it's not just my narrow thinking. I actually keep a spreadsheet showing my private and state pension income and tax paid - if I hadn't done this I wouldn't have even known I'd paid too much tax.
Sorry, I completely disagree with you, and with the previous poster.

The pension IS weekly income irrespective of how you choose to receive it and it IS due to be assessed in the previous tax year.

Likewise, if you were self employed you'd be taxed on when you EARNED income, not when you received it. The date of receipt is fundamentally irrelevant.
I agree with skyline. It will work in your favour next tax year.

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