HMRC has unveiled three new forms to allow people to claim back overpaid tax after accessing their pension under the new freedoms.
In a newsletter published today, the Government confirms individuals will be able to use P50Z, P53Z and P55 forms to reclaim tax if they were placed on emergency tax codes when taking withdrawals from their pension pot.
Previously, if someone without a P45 took a single withdrawal, but left some money in their pot, they would have to wait until the end of the tax year to reclaim. Now, they will be able to use the P55 form to speed up the refund from the tax office.
HMRC says: “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.”
In addition, the P50Z form should be used if individuals flexibly access their entire pension pot and have no other income. People who use up their entire pot but do have other taxable income in the same tax year should use form P53Z.
The introduction of the P55 will mean that although overpayment of tax is still a concern it should now be less so because tax can be reclaimed sooner.
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