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A client has turned 60 and has been advised that he is entitled to a pension as a result of a relatively short period of employment in the civil service many years ago. He pays tax at 40% on earnings, meaning he would prefer to defer payment of the pension until he retires from full-time employment, but will the tax liability also be deferred?
My client has sent me the information for his 2012/13 tax return with a reminder that during the year he turned 60 years of age and became entitled to a civil service pension from his employment in a government department many years ago.
My client has received the papers that must be completed to enable the pension to be claimed but has not yet returned them. As I understand it there is no advantage in deferring receipt of the pension because the amount payable will not increase further.
My client is liable to income tax at the 40% higher rate on the earnings from his current employment. He may therefore be assuming that if he delays taking the pension and the accumulated arrears until he retires at 65 this will be taxed only at the basic rate.
Is that the case and what entries...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
