Pension lump sum and uc and tax

janer1967
janer1967 Online Community Member Posts: 21,922 Championing
in Universal Credit (UC)
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 

Comments

  • calcotti
    calcotti Online Community Member Posts: 10,000 Championing
    edited September 2022
    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. 

    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
    janer1967 Online Community Member Posts: 21,922 Championing
    Thanks for your help @calcotti much appreciated 
  • L_Volunteer
    L_Volunteer Community Volunteer Adviser, Scope Member Posts: 7,922 Championing
    If we can do anything else to help @janer1967 please don't hesitate to let us know. We are all here for you  :)

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