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State Retirement Pensions: Females

Question for Treasury

UIN 65108, tabled on 26 June 2020

To ask the Chancellor of the Exchequer, what the tax liability is for women who receive back payments of underpaid state pension in a single financial year; and if he will make a statement.

Answered on

1 July 2020

This answer is a correction from the original answer.

Income tax is calculated on arrears of state pension for the tax year in which the pensioner was entitled to receive it, and not in the year in which a lump sum is paid.

Where arrears of state pension are paid, income tax will only be due on any income that exceeds the personal allowance for the respective tax year.

In addition, HM Revenue and Customs will only collect income tax for the current tax year and the four preceding tax years for arrears payments made due to DWP error. Any arrears of state pension relating to earlier years will not be subject to income tax.

Original answer

Income tax is calculated on arrears of state pension for the tax year in which the pensioner was entitled to receive it, and not in the year in which a lump sum is paid.

Where arrears of state pension are paid, income tax will only be due on any income that exceeds the personal allowance for the respective tax year.

In addition, HM Revenue and Customs can only collect income tax for the current tax year and the four preceding tax years. Any arrears of state pension relating to earlier years will not be subject to income tax.

Answered by

Treasury
Named day
Named day questions only occur in the House of Commons. The MP tabling the question specifies the date on which they should receive an answer. MPs may not table more than five named day questions on a single day.