Thousands of people aged 55 and over, who have made a one-off pension withdrawal, have paid too much tax in 2016/17.
Research undertaken by The Telegraph has suggested that as many as 200,000 savers have overpaid on tax, many of who are completely unaware. The HMRC do not proactively contact those who have paid too much in tax. Only 42,700 savers have attempted to reclaim the deductions relating to the 2016/17 tax year.
In order to reclaim tax on withdrawals, savers must fill out one of the following forms depending on whether they accessed cash from a defined benefit or defined contribution scheme.
Defined Benefit Schemes
· Self-assessment tax return- on lump sums
· P53- for those who do not file a self-assessment tax return.
Defined contribution scheme
· P50Z- If you withdrew your pension pot and have no other income for the tax year
· P53Z- If you withdrew your pension pot and have other sources of income for the tax year
· P55- If you withdrew part of your pension pot and are not receiving regular payments