new "SCHEME" PROBLEM

[Connemmara]

Any of you answered in my Scheme posting some time ago - could you please enter Law and find Scheme and perhaps take it from there. I told you that I would have to pay 40 percent of my money that (by the way I am still waiting on it) that instead of 40 per cent it will be 60%.

I am going to be honest in that all of this will happen to me as my friend who was in exact position last year has filled in form after form for Tax purposes - paid her 40% not so long ago and was told this morning by a red letter she has to give them £1,200 which works out for her 60%. When it comes to myself it will be the same. What can one do to find legal information. My sister has said going to a good Advice Centre but I do believe these centres would not know too much re the above. Hope any of you can help. And thanks once again.

[factor-fiction]

This one?
http://www.theanswerb...e/Question936477.html

[Connemmara]

Hi Factor 30 - yes I must have placed the question there as well as in LAW - what do you think of the 60% tax having to be paid. It is a bl dy disgrace.

[factor-fiction]

Sorry I haven't read it yet but I'd be surprised if you had paid 60% tax

[factor-fiction]

There is nothing in that thread that explains what tax is payable and why.
I 'm not going to trawl through your old posts so please can you either find it and attach a link, or, preferably, just summarise the details as concisely as possible.

What was the scheme? (pension, savings?)
Were your payments made from gross or net pay?
What was the value of payments?
What was the fund value?
How much tax did you have to pay?

[EcclesCake]

There are so many unknowns here, e.g what other income you have received this tax year, etc, that it is difficult to answer your question. Having said that, to have had a total amount of 60% deducted doesn't sound right at all.

I think you and your friend would do best by contacting the pay and pensions people who presumably administer the widows and dependents fund and ask them for a full breakdown of the deductions.

[EcclesCake]

Factor - it's a Civil Service thing. If you were a member of the the Civil Service Pension Scheme then you paid in ~1.5% of your salary to the Widows and Dependents pension scheme. If upon retirement you have not married you are entitled to a refund.

[annie0000]

if this is a refund of pension contributions, you will have had tax relief on those contributions and so when the refund is made, they will seek to remove the extra benefit that you received in terms of the tax relief and fund growth on that. Other than that, is this an unauthorised payment? Those have a high rate of tax applied.

[factor-fiction]

Thanks. So I'd be interested to see the figures for how Connemmara works out a tax rate of 60%.
In addition to these figures can I ask:
Does the fund value include some employer contributions that have to be refunded?
What marginal tax rate applied when premiums were paid from gross income?
Were there any NI savings due to a salary sacrifice scheme?

[Connemmara]

Yes Annie 00 - it was stated in the letter that it was an "unauthorised" payment but as I have said - it said in my letter that 40% tax will have to be paid but this whole scenario has happened to my friend - she got "unauthorised" payment last February 2010 - and as I said before she paid her 40% a few weeks ago but got a red letter saying she has to pay another £1,200 (I am repeating myself) - I dont how they jumped from 40% to 60% - she actually visited Tax office and they told her it would be 40% take or it lump it so she paid it - then this morning another 20% - God bless us - do the Tax Office just arrive at a sum because they know the punter/customer have not a clue re tax.

[factor-fiction]

I suggest that if you want an answer on here you need to get the full story - facts and figures - from your friend and then post them on here. A far better strategy, though, as we don't know all the details, is for your friend to ring her scheme and HMRC for an explanation.
Have you had chance to consider the points I raised earlier? In particular it would help to know her marginal tax rate at the time tax relief was given, what NI was given, did the employer also contribute, what are the figures that she says amount to 40%. Also what reason has been given in this demand for another 20%. Who says it's 20%- your friend or HMRC. And are you sure it's not just 20% tax on the fund interest (rather than on the whole capital sum)?

Also please can you clarify what an unauthorised payment is

[annie0000]

Factor - tPR unauthorised payments:

http://www.pinsentmas...sentMasonsPPLArt6.pdf

[dzug2]

I'm pretty sure it's 20% tax on the refund of contributions (repaying the original tax relief) PLUS 40% tax because it's an 'unauthorised payment'.

I've read a similar thread somewhere recently that I think came to the same conclusion but I can't find it again