Share this content

How to check DWP "corrections" of Pension errors

Elderly client has been paid £53k of backdated State Pension, but is it correct?

Didn't find your answer?

A very elderly client  has received £53k in backdated pension - she is part of this DWP mess, whereby her pension was not increased to reflect what she was due after her husband died in 2008.

We have a letter from the DWP saying that her pension is being increased to £148 from 30 June 2008. There is then a schedule showing the extra weekly amount due for each year, the number of weeks in that year...and that all adds up to the £53k received.

The trouble is, the extra weekly amounts shown in the letter look way too high in relation to the stated "corrected" amount of £148. Her current pension is £127, so the missing weekly amount in theory should be £21, but the adjustment shown in the letter for this year is £92 per week. This is a similar level of discrepancy for all previous years.

Has anyone else seen any of these yet? Any other concerns that the DWP figures may be incorrect? 

We will of course have to get into checking tax liabilities....but I'd like to be sure the amount received is correct first!

 

Replies (18)

Please login or register to join the discussion.

avatar
By Paul Crowley
22nd Sep 2021 13:31

Not sure I would get involved
Tax yes
Quantum of arears no
Unless this is your area of specialised knowledge
Do you have the records of pension received stating 2008?

Thanks (0)
Replying to Paul Crowley:
avatar
By Dorset Sole Practitioner
22nd Sep 2021 17:08

Thanks for your reply - I am (as you suggest) cautious about getting involved. It's just that the numbers from the DWP don't seem to make sense. Plus I don't want to reassure very elderly client just to pay the tax and all will be well, and then look like a muppet when the DWP come back saying they have massively overpaid her!

Thanks (0)
avatar
By pauld
22nd Sep 2021 14:04

I would be telling her family to organise the biggest party ever for her ! Does she have to pay higher rate tax on some of that? or is treated as being spread over a number of years?

Thanks (0)
Replying to pauld:
avatar
By David Ex
22nd Sep 2021 14:35

pauld wrote:

Does she have to pay higher rate tax on some of that? or is treated as being spread over a number of years?

I believe so unless some concession has been agreed.

Thanks (0)
Replying to David Ex:
avatar
By Wanderer
22nd Sep 2021 14:46

Isn't SRP taxed on a receivable basis?

Thanks (0)
Replying to Wanderer:
avatar
By David Ex
22nd Sep 2021 15:23

Wanderer wrote:

Isn't SRP taxed on a receivable basis?

You mean effectively accruals? No idea. I’ve just seen comments in general press articles suggesting more tax will be paid for many recipients than would have been the case had the correct payments been made in earlier years.

Thanks (0)
Replying to David Ex:
avatar
By Wanderer
22nd Sep 2021 17:25

ITEPA 2003
578 Taxable pension income
If section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid.

Thanks (0)
Replying to Wanderer:
avatar
By David Ex
24th Sep 2021 11:47

Wanderer wrote:

ITEPA 2003
578 Taxable pension income
If section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid.

Thanks. One of the many things I didn’t know!

So all the press articles suggesting “unnecessary” tax liabilities based on back payments being taxed on receipt are nonsense, then? Wouldn’t be the first time this type of thing was misreported!

Thanks (0)
Replying to David Ex:
avatar
By Wanderer
24th Sep 2021 11:51

Haven't read them, but probably.
Sloppy journalism / lack of knowledge also confuses SRP arrears with lump sums, the tax treatment of which is markedly different.

Thanks (0)
Replying to pauld:
avatar
By Dorset Sole Practitioner
22nd Sep 2021 17:05

Pension taxed on an arising basis..and we've already received revised P800s for 20/21 and 19/20 showing the increased pension for those years. Question is whether the revised amounts are correct!

Thanks (0)
avatar
By Tom Cross
22nd Sep 2021 14:59

The Whitehall "establishment" are up to their ears in the do-do, aren't they?

Passport office, the DVLA, HMRC, Monastery (sic) of Defence, dear, oh dear.

Added to which, we have a mop, for wiping the floor, in charge. And, a herd of sheep, following.

And, I'm sorry, this can't all be put at the doorof Covid-19, this is incompetence at the highest level.

Never, fear though, the New Year is just around the corner and there'll still be gongs a plenty. Let's reward the less than average.

Thanks (2)
avatar
By Wanderer
22nd Sep 2021 17:50

Dorset Sole Practitioner wrote:

Has anyone else seen any of these yet?

Video here has a lady who received £82,100 & another report of £22,350 so order of magnitude not that dissimilar to your client:-
https://www.moneysavingexpert.com/reclaim/married-women-missing-state-pe...
Thanks (0)
Replying to Wanderer:
avatar
By Hugo Fair
22nd Sep 2021 18:51

Good luck to OP in extracting the actual calculation used by DWP ... I've never managed to do so during countless attempts over the last 20+ years!

But one possibility for the 'disparity' mentioned in OP is alluded to within the article to which you've kindly provided a link:

"Widows whose pension wasn't increased when their husband died.
Widows will often see their basic state pension increase when their husband dies, based on their late husband's contribution, potentially up to a maximum of £137.60 a week in 2021/22.
Depending on your late husband's date of birth, you may also be able to inherit between 50% and 100% of his additional state pension (also known as SERPS – State Earnings-Related Pension Scheme – or second state pension).
This should typically have happened automatically, but some women have been missed out due to the IT glitch."

So that 3rd sentence (second state pension) may have something to do with it?

Thanks (2)
avatar
By Not Anonymous
22nd Sep 2021 20:03

There was a Parliamentary Q&A on the tax position last year and income tax is only going to be collected for recent years.

https://questions-statements.parliament.uk/written-questions/detail/2020...

Thanks (2)
Replying to Not Anonymous:
avatar
By Hugo Fair
22nd Sep 2021 21:07

Thanks.
Interesting that the statement actually given in HoC:
"HMRC can only collect income tax for the current tax year and the four preceding tax years"
... has been amended so that the 2nd word is now 'will' (not 'can').
Presumably HMRC didn't want to limit their collection abilities in the future!

Thanks (2)
Replying to Hugo Fair:
avatar
By Dorset Sole Practitioner
24th Sep 2021 08:31

Thank you for pointing that out - I hadn't noticed that subtle wording. It is certainly good news that only current +4 preceding years are to be taxed.

Thanks (0)
Replying to Not Anonymous:
avatar
By Michael Davies
23rd Sep 2021 10:09

Oh dear.So you ignore the chunk of back payment actually received.File returns on the basis of the revised uplift in pension receivable for the year you are filing a return.Then let HMRC do their business in amending the previous 4 years returns.
Sorry none of my widow pensioners have hit the jackpot on this as yet.Do you get any explanation at all from DWP as to how the lump sum is calculated ?If not,then presumably we wouldn’t have the info to amend those 4 previous years ourselves anyway ?
I was only half listening to the News last night,but I think DWP are allocating 500 staff to identifying the back log and we are talking about £1 billion in missed payments ?Presumably a lot of these old dears will never get their money,as they would have gone on to a better place.
Finally it was a bit rich of Steven Webb having a dig at DWP s incompetence last night;when this was a Department he ran for several years.Meanwhile the argument about the fairer sex not getting their pension at 65 continues to rumble on.

Thanks (0)
Replying to Michael Davies:
avatar
By Dorset Sole Practitioner
24th Sep 2021 08:29

The letter from DWP notifying the total back payment does split the amount over each tax year back to 2008/09. The mystery is how they get to the weekly uplift figure for each year. But at least we can see how much they are advising HMRC is additionally taxable for each year.

Thanks (0)
Share this content