Can you help me with Tax issues?
We are not authorised to provide any tax advice regarding your lump sum. Tax is based on each individual’s circumstances depending on your tax code, your annual income and other earnings factors; therefore we cannot accurately calculate tax.
How much tax I have to pay?
If you are already in receipt of your pension, the entire cash lump sum is taxable. For many people, the amount of tax deducted by the pension scheme will be the correct amount and there will be no more tax to pay.
If you are a deferred member, having not yet taken your pension, 25% of the cash lump sum available to you will be tax free. The remaining 75% of the lump sum will be taxed at the basic rate of 20%. However, depending on your current tax code, your annual income and other earnings factors, receiving the lump sum may push you into a higher tax bracket.
Can I split the payment or get it paid later?
For all members the payment must be made in full as a single payment and therefore cannot be split over more than one tax year or paid on an alternative date other than that quoted in the letter.
Additional tax help
For additional information on how much tax you may be paying, you may wish to contact Tax Help for Older People, a charity set up to provide tax advice for lower incomes. Their number is 01308 488 066.
I think I have paid too much tax?
If, after payment, you think you have paid too much tax you can ask HM Revenue & Customs for a tax refund now; you do not have to wait until the end of the tax year. You can call the HM Revenue & Customs Helpline on 0300 200 3300 and ask for a P53 Form. This is also available online. You will require your P45 to complete the P53, which the payroll department for the scheme should supply to you after payment of the cash lump sum has been made. This can take up to 4 weeks to receive.