Pension dilema

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion

Client has been making contributions of around £250 per month (net) to a personal pension plan for years. In 2005/06 he didn't earn any money at all and therefore the 6 payments he made (May - Nov 05) were ineligible and refunded to him in Nov 05. However, they refunded the gross amount to him (ie 6 x £320 = £1920). Was that right? and do you know if either the contributions and/or refund should be included in his 2005/06 return?
They've not even got his name right on the letter with the refund, so I don't know how much I can trust these figures!

I hope somone can help - I can't face trying to phone the revenue tomorrow for advice...

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    Jodie - not the answer you want, but I have never heard of this before.

    If he really earned nothing, then even if it should be on the return and isn't, then the amount of the refund will not be taxable (ie still below the threshold) - then just an error, but doesn't affect the tax position, so can't be fined.

    What about the box for income not included anywhere else? Box 13.1 - 13.3 and then a note at the end saying what it is??????

    Claudia


  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    thanks, I did phone hmrc this morning - i was quite impressed at how quickly my call was answered but the bloke i spoke to was the usual standard! he just said (in the most mono-tone voice) 'well i wouldn't have thought you need to enter anything'. so I didn't, and included a note to say 'on the advice of the helpline blah blah blah'.

    just one more to go :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    Who's is that Jodie - yours? :wink:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    nope, i wasn't counting mine! i guess that makes it 2 eh?!

    are you all finished now?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    Tax finished now finally (apart from guy in hospital) but got to do 2 VAT returns today for a guy with businesses over here who lives in France, and only comes over once a month :roll:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    In answer to the original point, refunded pension contributions do not need to be entered anywhere on the return - they are not income.

    However, I am not sure why they have been refunded at all. You are allowed to contribute £3,600 per annum regardless of whether you have any income.

    Perhaps your client made additional contributions that we are unaware of.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    thanks dean, you've got a good point there. The client has since turned 60 and is actually drawing his pension now. As he didn't earn any money in 2005/06 I wouldn't be surprised if he'd requested for those premiums to be refunded - or could it maybe be that it's a condition of having that particular pension which meant that he couldn't make contributions when he wasn't working? He'd not made additional contirbutions, i' sure of that much.
    Hopefully it's not something I'll come accross again for a while!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pension dilema

    It used to happen a lot before stakeholder pensions and the £3,600 allowance was introduced.

    I was always on the phone to pension advisers in January as clients wanted to maximise their contributions before the deadline, add to that all the old carry back/forward rules and it was a headache I'm glad not to see anymore!

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