HMRC are currently undertaking checks to see if Income Tax is due on state pensions arrears that have been paid over the last couple of years to individuals who are in Self Assessment. Those affected should expect to receive a letter in the coming weeks.

The Department of Work and Pensions (DWP) have been making arrears payments since August 2020 to pensioners who had been underpaid their state pension and this process is expected to be ongoing until the end of 2024. In the meantime, HMRC are only now looking at whether these payments have resulted in additional tax liabilities.

If more tax is due HMRC will collect this for all tax years from and including 2019-20. However where the individual died before their arrears were paid no tax will be due.

Useful guides on this topic

State Pension Age
The state pension age is gradually being increased. What is the current state pension age? How often is it reviewed? 

Pensions: Tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there? 

Pensions: What happens when you die?
What happens to your pension when you die? What tax is due by your estate? Will your family have to pay Income Tax if they receive your pension going forward? What can you do to mitigate any tax charges? 

Source: ICAEW 

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