HM Revenue and Customs has once again updated its guidance on allowing retirees to reclaim overpaid tax after accessing their pension under the new freedoms.
In a newsletter published last week, the government confirmed that people will be able to use the P50Z, P53Z and P55 forms to claim back tax if they are placed on emergency tax codes when taking pension withdrawals.
In February, HMRC made successive attempts to clear up the tax implications of taking money under the at-retirement reforms, with experts first concluding that an emergency tax would be used and individuals would have to wait until the end of the tax year to reclaim.
It then published different scenarios to clarify the tax situation would be, explaining that if scheme administrators already have a tax code for members and are making payments, the correct value of tax will be deducted at the appropriate allowance.
People will now be able to use a P55 form to get a refund from the tax office more quickly, although HMRC noted that those planning to take a series of irregular payments should talk to their pension provider.
“Having applied the temporary rate of tax to the first payment, in some cases the provider might be able to report a zero payment for the months where no withdrawal is made, and work with HMRC to tax subsequent withdrawals and correct the person’s tax position,” the update stated.
The P50Z form should be used by those flexibly accessing their entire pension pot with no other income, while those using their entire pot without any other taxable income in the same tax year should use form P53Z.
peter.walker@ft.com
