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People who decide to take advantage of the new pensions flexibility should considering the tax credit consequences, the Low Incomes Tax Reform Group has advised.
Those who withdraw money from their retirement pot from the age of 55 should consider more than just the effect on their income tax liability, according to the charity’s technical director, Robin Williamson
HMRC now calculate tax credits awards through the real-time information (RTI) system.
The new set-up – effective from 6 April 2014 – means renewals notices will show the total gross pay for the year, which may be from more than one source.
Claimants should check that income details shown are correct and contact the Revenue as soon as possible if they think the information is wrong, the tax department said.
Some claimants may contact their employer or pension provider if they think the income is wrong. In which event, the employer or pension provider should:
Tax credit claimants should take extra care when checking their 2012/13 final award notice, to ensure they do not lose their right to challenge overpayments, the Low Incomes Tax Reform Group (LITRG) has urged.
The charity’s call follows the introduction of two changes that will affect people wanting to dispute tax credits overpayments: HMRC will no longer stop recovery of overpayment while they consider a dispute, and claimants now have only three months to dispute an overpayment. Disputes could be made at any time until the time limit was introduced on 6 April.
