Pension lump sum and uc and tax

janer1967

Hi there 

I recently took a small pension lump sum just short of £700 and have couple questions 

I paid tax on this which I expected will I get this tax payment refunded as it falls below the personal allowance ? 

Will my uc payment be reduced this month due to the pension will this class as earning ? 

If it does class as earnings will the work allowance apply as I get child element and lcwra ? 

Any advise appreciated 

calcotti

The lump sum is capital, not income, so has no impact on your UC unless it takes your capital over £6000.

You will (eventually) get a tax refund automatically. This would likely not be until around next October unless you chase HMRC for it sooner than this. 

https://www.gov.uk/government/publications/flexibly-accessed-pension-payment-repayment-claim-p55

Any tax refund is treated as earnings for UC (the WA would apply) but only if the refund relates to a tax year in which you have had some earnings. Therefore if you are not working the tax refund should be ignored as earnings and I think should instead also be treated as capital. Have no idea how likely UC are to get this right!

janer1967

Thanks for your help @calcotti much appreciated 

L_Volunteer

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