Latest news with #HelenMorrissey
Daily Mail
3 hours ago
- Business
- Daily Mail
HMRC hands back £48.7m in overpaid pension tax in just three months
HM Revenue & Customs is still refunding millions of pounds back to Britons in overpaid pension tax. It repaid £48.7million in overpaid pension tax between 1 April to 30 June, new data from HMRC shows. There were 13,000 refund forms processed by HMRC in the period and the average refund came in at around £3,800. Between January and March, HMRC refunded £44million in overpaid tax back to pension savers. The total number of claims for overpaid tax on pension withdrawals has now gone over half a million since the introduction of Pension Freedoms in 2015. People taking out a lump sum from their pension for the first time are at particular risk of overpaying too much tax as they can be taxed with an emergency tax code. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: 'The overpaid pension tax saga continues to drag on.' She said 'these refunds amount to a significant chunk of change.' What causes the problem? People can access money from their pensions in two ways. First, you can take a 25 per cent lump sum of your pension tax-free. The rest is charged at your normal income tax rate. The second option is to take a lump sum from a pension drawdown plan. If you do this, 25 per cent of your total pension savings is tax-free and any subsequent withdrawals are subject to income tax. The issue of overpaying tax on pension withdrawals often hits people who are taking a lump sum out of their pension for the first time. Morrissey said: 'They get taxed on what is known as a 'month one' basis, which means it's treated as though the same amount will come out every month. 'This results in a far bigger tax bill, which can come as an unpleasant surprise or even de-rail people's retirement plans.' Since pension freedom reforms were introduced in 2015, HMRC docks extra tax off any initial sum taken from a fund on the assumption it could be 'month one' of a series over the rest of a tax year. In essence, HMRC assumes the pension lump sum you are withdrawing will be repeated every month. Pension providers typically collect the tax on your behalf, meaning the lump sum you get is paid net of tax. The pension provider may not know what an individual's tax code is or have any details on their other sources of income. As a result, an emergency tax code is used on the withdrawal. How can taxpayers get a refund? Affected pension savers currently have to claim back their cash from HMRC themselves or wait until it is done after the end of the current tax year. Morrissey said that while the overpaid tax can be reclaimed, 'it's an admin headache that people can well do without.' She added: 'Ten years on from the advent of freedom and choice it's a process that should have been consigned to history.' If you make a single lump sum pension withdrawal, check you have not paid more tax than you should. You can apply for a tax refund online on HMRC's website. Morrissey said: 'If you do get clobbered with a big tax bill, then you will need to fill out one of three forms so that HMRC can process the refund. Otherwise, you can wait until the end of the tax year.' How can pension savers help themselves? The pension saver tax saga is ongoing and should have been nipped in the bud years ago. However, there are steps pension savers can take to mitigate the risk of overpaying tax. Morrissey said: 'You could make your first pension withdrawal a relatively small one. 'However, if you were looking to take a lump sum to fund travel or home renovations, for instance, you would need to plan ahead to make sure the money you take isn't whittled away by tax which could delay your plans. Is HMRC doing anything about this? After previously defending the system and insisting 'nobody overpays as a result', HMRC has vowed to put a stop to the practice of forcing pension savers to apply for tax refunds. In a newsletter in January, HMRC said that from April it would move much more quickly to replace 'emergency' tax codes with regular tax codes, ensuring the correct amount of tax is deducted in real time An HMRC spokesman told This is Money in January: 'Those who, for the first time, start to receive ongoing pension payments will benefit from this change. 'We're considering options for people taking ad-hoc lump sums and will consult with the industry before taking our next steps.' Webb said: 'How longer will all of this go on? Ten years on from the introduction of Pension Freedoms, tens of thousands of people each year are still having to fill in forms to claim back overpaid tax on their pensions from HMRC. 'This is a system designed for the convenience of the tax office, not the taxpayer. 'Given that most people in retirement pay tax at the basic rate, it would not be difficult to have a system which got things right for most people most of the time, rather than making over-taxing people part of 'business as usual'. 'It is time to that the whole system was simplified and made more predictable for pension savers looking to draw on their pensions.'
Daily Mirror
23-07-2025
- General
- Daily Mirror
Older women urged to check for State Pension back payments worth over £8,300
The DWP has said thousands of women may be owed back payments in State Pension - but many haven't claimed yet. The reason might surprise you The Department for Work and Pensions (DWP) has revealed that between January 8, 2024 and March 31, 2025, a joint State Pensions corrections exercise with HM Revenue and Customs (HMRC), identified 12,379 State Pension underpayments to women due to incorrect National Insurance records. In 2022, the DWP discovered several State Pension cases where it seemed that historic periods of Home Responsibilities Protection (HRP) were missing, resulting in inaccurate State Pension payments. To date, approximately £104 million in arrears have been paid out, with an average payment of £8,377. Retirement expert Helen Morrissey is encouraging older individuals to fill out the online form or get in touch with the Pension Service if they believe they have been affected. This comes after new research from the DWP highlighted the main reasons why those who received a letter from HMRC asking them to check their State Pension - as it could be incorrect - failed to do so. HMRC has dispatched over 370,000 letters - primarily to women - urging them to verify their State Pension payments as they may be lower than what they are entitled to. However, DWP research suggests that the majority of people who received a letter did not proceed to apply for HRP, reports the Daily Record. Barriers included not understanding the letter, thinking the communication was a scam and relying on digital methods to make a claim. HRP was a scheme intended to safeguard parents' and carers' entitlement to the State Pension and was superseded by NI credits from April 6, 2010. HMRC is using National Insurance records to identify individuals who may have been entitled to Home Responsibilities Protection between 1978 and 2010 but have no HRP on their NI record. Post May 2000, it became compulsory to include a NI number on claims, hence those claiming after this point will not have been affected. The head of retirement analysis at Hargreaves Lansdown said: "This research lays bare the complexities the government faces in resolving the long running issue of underpaid State Pensions. "The State Pension system has become so confusing that even when the UK Government has communicated with those who may have a claim, the complexity and jargon has put many of them off. This means many thousands are getting less than they are entitled to." "Issues identified by the government include the use of jargon. Many simply didn't understand what was being asked of them -that mistakes made decades ago had been identified and could be rectified." "Terms such as Home Responsibilities Protection haven't been used for many years - it's understandable that people may have little recollection as to whether they claimed it or not," theye explained. "The reliance on online forms to claim refunds was also a significant barrier, with many not feeling internet savvy enough to navigate the system without help." READ MORE: HMRC warning to anyone with a pension pot who's tempted to cash in early Ms Morrissey went on: "Notably many people decided not to take action because they feared doing so might actually reduce their state pension or they were scared that they had been targeted by scammers. It's clear the government faces an uphill battle if it is to successfully reunite those affected with their extra pension payments. "The introduction of the New State Pension system in 2016 was meant to simplify things - and it should, but again challenges remain for these younger groups. Those who opted out of Child Benefit because of the High-Income Child Benefit Charge will not have known that by doing so they risk missing out on National Insurance credits towards their State Pension." The UK Government has implemented measures to address this issue, but Ms Morrissey cautions it remains something that can "trip people up and so awareness needs to be raised on an ongoing basis". The retirement specialist continued: "Encouraging people to check their State Pension record to see if there are any gaps is vital - if there are mistakes, then they have time to correct them." "If the gap has occurred during a period of time when they qualified for a benefit, such as Child Benefit, then they can backdate a claim and get the gaps filled for free. There's also the option of paying for voluntary contributions to make sure you get the most from your state pension." How to use the online HRP tool You might still be eligible to apply for HRP, for full tax years (6 April to 5 April) between 1978 and 2010, if any of the following were true: You were claiming Child Benefit for a child under the age of 16 You were caring for a child with your partner who claimed Child Benefit, instead of you You were getting Income Support because you were caring for someone who was sick or disabled You were caring for a sick or disabled person who was claiming certain benefits Additionally, you can apply if, for a full tax year between 2003 and 2010, you were either: A foster carer Taking care of a friend or family member's child ('kinship carer') in Scotland Who automatically qualified for HRP The guidance on clarifies that most individuals automatically received HRP if they were: Getting Child Benefit in their name for a child under 16 and they had given the Child Benefit Office their National Insurance number Getting Income Support and they did not need to register for work because they were taking care of someone who was sick/disabled If your partner claimed Child Benefit instead of you If you reached State Pension age before 6 April 2008, you cannot transfer HRP. However, you may be able to transfer HRP from a partner you lived with if they claimed Child Benefit while you both cared for a child under 16 and they do not need the HRP. They can transfer the HRP to you for any 'qualifying years' they have on their National Insurance record between April 1978 and April 2010. This will be converted into National Insurance credits. Married women or widows You cannot get HRP for any complete tax year if you were a married woman or a widow and: You chose to pay reduced rate Class 1 National Insurance contributions as an employee (this is commonly known as the small stamp) You chose not to pay Class 2 National Insurance contributions during self-employment If you were caring for a sick or disabled person You can only claim HRP for the years you spent caring for someone with a long-term illness or disability between 6 April 1978 and 5 April 2002. You must have spent at least 35 hours a week caring for them and they must have been getting one of the following benefits: Attendance Allowance Disability Living Allowance Constant Attendance Allowance The benefit must have been paid for 48 weeks of each tax year on or after 6 April 1988 or every week of each tax year before 6 April 1988. Even if you are over the State Pension age, you can still apply. However, any increase in State Pension that may have been due for previous years will not usually be paid. If you were receiving Carer's Allowance There's no need to apply for HRP if you were receiving Carer's Allowance. You'll automatically receive National Insurance credits and would not typically have needed HRP. If you were a foster carer or caring for a friend or family member's child You must apply for HRP if, for a full tax year between 2003 and 2010, you were either:. All of the following must also be true: You haven't received Child Benefits You weren't employed You didn't earn enough money in a tax year for it to count towards the State Pension Article continues below If you reached State Pension age on or after 6 April 2010 Any HRP you had for full tax years before 6 April 2010 was automatically converted into National Insurance credits, if you needed them, up to a maximum of 22 qualifying years. A comprehensive overview of HRP can be found on here.
Daily Record
23-07-2025
- Business
- Daily Record
Older women urged to check for State Pension back payments worth over £8,300
The Department for Work and Pensions (DWP) has said that between January 8, 2024 and March 31, 2025, a joint State Pensions corrections exercise with HM Revenue and Customs (HMRC), identified 12,379 State Pension underpayments to women whose National Insurance (NI) records are incorrect. In 2022, the DWP became aware of a number of State Pension cases where it appeared that historic periods of Home Responsibilities Protection (HRP) were missing, leading to inaccurate State Pension payments. So far, around £104 million in arrears have been paid out, with an average payment of £8,377. Retirement expert Helen Morrissey is urging older people to complete the online form or contact the Pension Service if they think they have been affected after new research from the DWP showed the main reasons why those who have received a letter from HMRC asking them to check their State Pension - as it could be wrong - have failed to do so. HMRC has sent out more than 370,000 letters - mostly to women - urging them to check their State Pension payments as they may be lower than they are entitled to. However, the DWP research indicates that the majority of people contacted by letter did not go on to apply for HRP. Barriers included: Not understanding the letter Thinking the communication was a scam Reliance on digital methods to put in a claim HRP was a scheme designed to help protect parents' and carers' entitlement to the State Pension and was replaced by NI credits from April 6, 2010. HMRC is using NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record. After May 2000, it became mandatory to include a NI number on claims so people claiming after this point will not have been affected. The head of retirement analysis at Hargreaves Lansdown, said: 'This research lays bare the complexities the government faces in resolving the long running issue of underpaid State Pensions. The State Pension system has become so confusing that even when the UK Government has communicated with those who may have a claim, the complexity and jargon has put many of them off. This means many thousands are getting less than they are entitled to. 'Issues identified by the government include the use of jargon. Many simply didn't understand what was being asked of them -that mistakes made decades ago had been identified and could be rectified. 'Terms such as Home Responsibilities Protection haven't been used for many years - it's understandable that people may have little recollection as to whether they claimed it or not. 'The reliance on online forms to claim refunds was also a significant barrier, with many not feeling internet savvy enough to navigate the system without help.' Ms Morrissey continued: 'Notably many people decided not to take action because they feared doing so might actually reduce their state pension or they were scared that they had been targeted by scammers. It's clear the government faces an uphill battle if it is to successfully reunite those affected with their extra pension payments. 'The introduction of the New State Pension system in 2016 was meant to simplify things - and it should, but again challenges remain for these younger groups. Those who opted out of Child Benefit because of the High-Income Child Benefit Charge will not have known that by doing so they risk missing out on National Insurance credits towards their State Pension.' The UK Government has put measures in place to deal with this, but Ms Morrissey warns it remains something that can 'trip people up and so awareness needs to be raised on an ongoing basis'. The retirement expert added: 'Encouraging people to check their State Pension record to see if there are any gaps is vital - if there are mistakes, then they have time to correct them. 'If the gap has occurred during a period of time when they qualified for a benefit, such as Child Benefit, then they can backdate a claim and get the gaps filled for free. There's also the option of paying for voluntary contributions to make sure you get the most from your state pension.' How to use the online HRP tool You may still be able to apply for HRP, for full tax years (6 April to 5 April) between 1978 and 2010, if any of the following were true: you were claiming Child Benefit for a child under 16 you were caring for a child with your partner who claimed Child Benefit instead of you you were getting Income Support because you were caring for someone who was sick or disabled you were caring for a sick or disabled person who was claiming certain benefits You can also apply if, for a full tax year between 2003 and 2010, you were either: Who qualified automatically for HRP The guidance on explains that most people got HRP automatically if they were: getting Child Benefit in their name for a child under the age of 16 and they had given the Child Benefit Office their National Insurance number getting Income Support and they did not need to register for work because they were caring for someone who was sick or disabled If your partner claimed Child Benefit instead of you If you reached State Pension age before April 6, 2008, you cannot transfer HRP. However, you may be able to transfer HRP from a partner you lived with if they claimed Child Benefit while you both cared for a child under 16 and they do not need the HRP. They can transfer the HRP to you for any 'qualifying years' they have on their National Insurance record between April 1978 and April 2010. This will be converted into National Insurance credits. Married women or widows You cannot get HRP for any complete tax year if you were a married woman or a widow and: you had chosen to pay reduced rate Class 1 National Insurance contributions as an employee (commonly known as the small stamp) you had chosen not to pay Class 2 National Insurance contributions when self-employed If you were caring for a sick or disabled person You can only claim HRP for the years you spent caring for someone with a long-term illness or disability between April 6, 1978 and April 5, 2002. You must have spent at least 35 hours a week caring for them and they must have been getting one of the following benefits: Attendance Allowance Disability Living Allowance at the middle or highest rate for personal care Constant Attendance Allowance The benefit must have been paid for 48 weeks of each tax year on or after April 6, 1988 or every week of each tax year before April 6, 1988. You can still apply if you are over State Pension age. You will not usually be paid any increase in State Pension that may have been due for previous years. If you were getting Carer's Allowance You do not need to apply for HRP if you were getting Carer's Allowance. You'll automatically get National Insurance credits and would not usually have needed HRP. If you were a foster carer or caring for a friend or family member's child You have to apply for HRP if, for a full tax year between 2003 and 2010, you were either: a foster carer caring for a friend or family member's child ('kinship carer') in Scotland All of the following must also be true: you were not getting Child Benefit you were not in paid work you did not earn enough in a tax year for it to count towards the State Pension If you reached State Pension age on or after 6 April 2010 Any HRP you had for full tax years before April 6, 2010 was automatically converted into National Insurance credits, if you needed them, up to a maximum of 22 qualifying years. A full overview of HRP can be found on here.
The Herald Scotland
22-07-2025
- Business
- The Herald Scotland
State pension age review needed to ensure system ‘affordable'
The state pension age is currently 66, rising to 67 by 2028 and the Government is legally required to periodically review the age. The Chancellor told reporters: 'We have just commissioned a review of pensions adequacy, so whether people are saving enough for retirement, and also the state pension age. 'As life expectancy increases it is right to look at the state pension age to ensure that the state pension is sustainable and affordable for generations to come. 'That's why we have asked a very experienced set of experts to look at all the evidence.' The review was announced by the Department for Work and Pensions on Monday and will involve an independent report, led by Dr Suzy Morrissey, on specified factors relevant to the Review of State Pension Age along with the Government Actuary's Department's examination of the latest life expectancy projections data. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: 'There will be many factors that need to be assessed during this review of the state pension age. 'One of the most important will be healthy life expectancy which according to the latest data hovers in the early 60s. 'This means the reality is that many people will face real difficulties in continuing to work until their mid-to-late 60s and could face a sizeable income gap while they wait to receive their state pension.' Rachel Vahey, head of public policy at AJ Bell, said: 'An ageing population places an increasing burden on taxpayers, with state pension costs rising and fewer working-age taxpayers to cover the cost. 'Future governments will hope that an improved economy and growing tax receipts will help alleviate some of the pressure. But that can't be guaranteed and there needs to a be a credible plan for maintaining affordability.'
Daily Mirror
21-07-2025
- Business
- Daily Mirror
People on Basic State Pension told to check for payment errors
DWP wants people to get in touch if they think their pension is wrong Independent Age has shared a new State Pension factsheet, offering vital insights for older people who already receive the benefit, which is worth up to £230.25 each week, as well as those approaching retirement age. The informative guide delves into all aspects of the payments, clarifying the distinctions between the New and Basic State Pensions, the right time to claim, options for deferral, how the amount is determined, and potential tax obligations. Yet, it also addresses historical underpayments, prompting people on the Basic State Pension who might have missed out on National Insurance (NI) 'top-ups' to get in touch with the Pension Service for a recalculation if they suspect errors. A survey by Independent Age revealed that 41% of over-50s are worried about their post-retirement finances, with nearly half admitting to a lack of understanding regarding their financial prospects, including the State Pension, upon retiring, as reported by the Daily Record. Guidance from Independent Age reads: "If you qualify for Basic State Pension and can claim State Pension 'top-ups', these are usually calculated for you. But some people - particularly women who paid reduced NI rates - may have had their State Pension miscalculated and underpaid." "If you think this affects you, contact the Pension Service to ask them to recalculate your State Pension. You can do this whether you're claiming or delaying your State Pension. You can also contact our helpline to arrange to speak to an adviser." The comprehensive guide to the full State Pension is accessible on the Independent Age website here. Alternatively, you can reach out to them directly by dialling 0800 319 6789. State Pension historical errors The Department for Work and Pensions (DWP) has disclosed that a collaborative State Pensions correction initiative with HM Revenue and Customs (HMRC), running from January 8, 2024, to March 31, 2025, unearthed 12,379 cases of State Pension underpayments to women with erroneous National Insurance (NI) records. In 2022, the DWP detected several State Pension accounts where it seemed historic periods of Home Responsibilities Protection (HRP) were absent, resulting in incorrect State Pension disbursements. To date, approximately £104 million in arrears have been compensated, averaging payments of £8,377 each. Pension expert Helen Morrissey is calling on seniors to fill out the online form or get in touch with the Pension Service if they suspect they've been impacted. This is following new findings from the DWP which highlight the primary reasons why recipients who have received a letter from HMRC to verify their State Pension – due to potential inaccuracies – haven't responded. HMRC has dispatched over 370,000 letters, primarily to women, encouraging them to review their State Pension payments as they may be entitled to a higher amount. However, research from the DWP suggests that most people who received a letter did not subsequently apply for HRP. The barriers included: Not understanding the letter Thinking the communication was a scam Reliance on digital methods to put in a claim HRP was a scheme established to safeguard the State Pension entitlements of parents and carers, which was superseded by NI credits from 6 April 2010. HMRC is utilising NI records to identify as many people as possible who may have been eligible for HRP between 1978 and 2010 and who do not have HRP on their NI record. After May 2000, it became compulsory to include a NI number on claims, so those who claimed after this date will not have been affected. You might still be able to apply for HRP, for full tax years (6 April to 5 April) between 1978 and 2010, if any of the following were true: you were claiming Child Benefit for a child under 16 you were caring for a child with your partner who claimed Child Benefit instead of you you were getting Income Support because you were caring for someone who was sick or disabled you were caring for a sick or disabled person who was claiming certain benefits You can also apply if, for a full tax year between 2003 and 2010, you were either: a foster carer caring for a friend or family member's child ('kinship carer') in Scotland Who qualified automatically for HRP The guidance on explains that most people got HRP automatically if they were: getting Child Benefit in their name for a child under the age of 16 and they had given the Child Benefit Office their National Insurance number getting Income Support and they did not need to register for work because they were caring for someone who was sick or disabled If your partner claimed Child Benefit instead of you If you reached State Pension age before April 6, 2008, you cannot transfer HRP. However, you may be able to transfer HRP from a partner you lived with if they claimed Child Benefit while you both cared for a child under 16 and they do not need the HRP. They can transfer the HRP to you for any 'qualifying years' they have on their National Insurance record between April 1978 and April 2010. This will be converted into National Insurance credits. Married women or widows You cannot get HRP for any complete tax year if you were a married woman or a widow and: you had chosen to pay reduced rate Class 1 National Insurance contributions as an employee (commonly known as the small stamp) you had chosen not to pay Class 2 National Insurance contributions when self-employed If you were caring for a sick or disabled person You can only claim HRP for the years you spent caring for someone with a long-term illness or disability between April 6, 1978 and April 5, 2002. You must have spent at least 35 hours a week caring for them and they must have been getting one of the following benefits: Attendance Allowance Disability Living Allowance at the middle or highest rate for personal care Constant Attendance Allowance The benefit must have been paid for 48 weeks of each tax year on or after April 6, 1988 or every week of each tax year before April 6, 1988. You can still apply if you are over State Pension age. You will not usually be paid any increase in State Pension that may have been due for previous years. If you were getting Carer's Allowance You do not need to apply for HRP if you were getting Carer's Allowance. You'll automatically get National Insurance credits and would not usually have needed HRP. If you were a foster carer or caring for a friend or family member's child You have to apply for HRP if, for a full tax year between 2003 and 2010, you were either: a foster carer caring for a friend or family member's child ('kinship carer') in Scotland Article continues below All of the following must also be true: you were not getting Child Benefit you were not in paid work you did not earn enough in a tax year for it to count towards the State Pension If you reached State Pension age on or after 6 April 2010 Any HRP you had for full tax years before April 6, 2010 was automatically converted into National Insurance credits, if you needed them, up to a maximum of 22 qualifying years. A full overview of HRP can be found on here.
