DWP deadline warning as pensioners told they need to act fast and finish form | Personal Finance | Finance

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have been urged to act quickly and get their tax returns sent off if they need to complete one.

The deadline to fill in a self assessment form is January 31, and anyone who misses the deadline faces penalties for late filing.

Tax experts at PensionBee pointed to three key reasons why pensioners may need to fill in self assessment form.

Director of Public Affairs, Becky O’Connor, said: “There may be some good pension-related reasons you need to do so, even if you’ve never filled one out before and have no other reason to fill one out.

“This might especially apply to you if you have recently changed jobs and are now paying higher rate tax and are in a relief at source scheme.”

1. Claiming tax relief on ‘relief at source’ pension contributions

If you earn more than £50,270 and pay into a ‘relief at source’ pension, you may need to compelte a self-assessment return to get the extra tax relief.

Only basic rate relief is added automatically to pension contributions by providers operating ‘relief at source’ pension schemes.

PensionBee has estimated that some £1.3billion in tax relief was left unclaimed by higher and additional rate taxpayers between 2016 and 2021.

2. To state if contributions are over the Annual Allowance or Money Purchase Annual Allowance, and whether ‘carry forward’ rules are being applied

The old Annual Allowance of £40,000 still applies for the 2022/2023 tax year.

Contributions above the Annual Allowance would need to be applied to any unused allowance from the three previous tax years through ‘carry forward’, to still be eligible for the tax relief.

For individuals who earned more than £240,000 of ‘adjusted’ income in 2022/23 (or more than £260,000 for 2023/24), there is a tapered annual allowance that applies. This can reduce the amount that can go into a pension to £4,000 for 2022/23 (£10,000 a year from 2023/24).

There is also a Money Purchase Annual Allowance of £4,000 for anyone who has already started to take taxable income from their pension. This is the maximum amount they could pay in and still get tax relief for the tax year 2022/23.

This limit went up to £10,000 for 2023/24. Pensioners should note the carry forward can no longer be used once the MPAA is triggered.

3. You’ve started making withdrawals from your pension

A peerson amy find their first withdrawal from their pension pot is completed using a ‘month 1 emergency tax code’, which usually means they overpay tax.

You can get back any overpaid tax from HMRC and normally this is done via a special form and an adjustment to someone’s tax code.

But a person can also wait until the end of the tax year and get a refund after filing a self-assessment tax return. A person may also be able to avoid this overpayment in the first place by providing an up-to-date tax code or P45 to their pension provider before they make their first withdrawal.

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