How to Claim Tax Back on a Pension
The United Kingdom government encourages you to save for your retirement by giving tax relief on pension contributions at the U.K. basic rate (20 per cent as of April 6, 2010). Once you start to receive your pension you have to pay tax, because your pension is considered taxable income by the U.K. HM Revenue & Customs. You are given an annual tax-free allowance before tax is payable on your pension: £9,490 if you are aged 65 to 74 and £9,640 if you are 75 or over for the tax year April 6, 2010 to April 5, 2011.
For several reasons you may need to claim tax back on your pension. The wrong tax code may have been used, or other state benefits you receive may have been reduced. If you have more than one pension, it's possible your tax-free allowance has been recorded incorrectly and is not being applied to the right pension.
If you have paid too much tax on your pension, you can claim it back. There are three ways to claim tax back, depending on your personal circumstances and type of pension arrangement.
Contact your local HM Revenue & Customs tax office to get tax back on your pension through Pay As You Earn (PAYE). Visit the Tax Office Locator page of the HM Revenue & Customs website to locate your nearest tax office.
Enter your pension provider reference or your three digit tax office code to claim tax back on your pension. If you don't have either of these, enter your zip code or town.
Click "Search." Your nearest tax office contact information will be displayed.
Call the tax office or visit the office in person. Provide the tax official with your pension details, including the name of your pension provider, your pension reference number and full name and address. If you do not know your pension reference number, provide your date of birth and Social Security number.
Answer any additional questions to verify your identity. You are informed of your revised tax code, which is sent to your pension provider and to you. Your pension provider adjusts the amount of tax you pay, and you receive your tax refund in your next payment.
Check your tax records to determine whether your claim to get tax back on your pension applies before April 2007 or after April 2007. If your claim relates to the period after April 2007, claim your tax back through PAYE, and use the steps provided in Section 1. If your claim applies before April 2007, complete the following steps.
Visit the HM Revenue & Customs website and click "Forms" in the panel on the left to claim tax back on your retirement annuity. Type "R40" in the box, and click "Find a Form."
Click "R40 Notes--Notes for R40 Claim for repayment of tax deducted from savings and investments." Read the instructions.
Return to the main page, and click "R40 (PDF, 97KB)" to download application form R40. Print the form.
Complete the R40 form. Mail it to your local tax office. If there is no local tax office, mail the form to:
Leicester & Northants (Claims)
1 Causeway Lane
Leicester, LE1 4AA
Visit the HMRC website for details regarding time limits. Your claim form is processed, and overpaid tax is refunded to you.
Complete steps one through three in the section "Claim Tax Back through PAYE."
Contact your local tax office, and request that Form P53 (Trivial pension/annuity in-year repayment claim) be mailed to you. Obtain the form in person from the tax office if you prefer. Provide your pension and personal details, as Form P53 is printed based on your personal circumstances.
Complete the form. Provide an estimate of your pension income.
Submit Form P53, together with Part 2 and Part 3 of your P45, to your tax office by mail or in person. The P45 is the form you receive from your employer when you retire that details your income and tax. Retain Part 1A of your P45 for your records. Your application to claim tax back on your pension is processed, and any overpaid tax due is refunded. Complete another P53 at the end of the tax year (April 5) to show your actual income. The tax office will make necessary adjustments.
- Pension reference number or
- Social Security number