This week the Revenue Commissioners sent out letters to about 150,000 pensioners in Ireland informing them that they may not have been paying the right amount of Income Tax.
It appears that the Revenue has done some detailed data checking and matching on about half a million pensioners with the Department of Social Protection.
The data checks have shown up about 115,000 people who are paying less tax on their pensions than they should be – some are paying none at all . Many of these are people who are also getting work related private pensions or other sources of income .
It appears that when some people went onto the state pension – the Revenue were not informed about it . Most pensioners probably assumed that since the pension was being paid by the State – that there was no need to inform the Revenue. It would seem a fair assumption to make. Many people probably think that the state pension is not taxed anyway.
In the worst cases – there are pensioners who are getting a high occupational pension that already brings them into the 41% tax bracket. Some of these people are getting the State Pension – but for some reason it was not on the records of the Revenue Commissioners . This means their state pension should have been taxed at 41% – which would be €4,400 a year for a single person and €8,800 for a couple.
Revenue have not ruled out backdating the underpayment.
The majority will be hit with much smaller tax deductions – and many will see no change at all if their total annual income is less than €18,000 (if single), or €36,000 (if couple).
Many people might have already seen a difference in their first works pension/salary payment of 2012. Revenue informed pension providers and employers in mid-December 2011 of the revised tax credit and rate band details for 2012 . So they will already be deducting the extra income tax from private pensions.
It seems that about 15,000 pensioners will have some tax deducted even though their total incomes fall below the threshold for paying tax, pending the issuing of new tax certificates. They will get any overpayment of tax back .
There is better news for about 20,000 pensioners – who have overpaid tax and will be due a refund.
The letters sent were worded as follows:
I am writing to inform you that we have recently received up to date details of State, Widow’s/Widower’s/Surviving Civil Partner’s and Invalidity Pensions from the Department of Social Protection (formerly Department of Social Welfare).
I note that you are a recipient of one of these pensions but it appears that either, you have not previously advised Revenue that you were getting such a pension payment from the DSP, or your circumstances have changed and consequently, these pension details have not been reflected in your PAYE records.
In order to regularise your affairs from 2012 onwards, Revenue has updated your records with your most recent DSP pension details and as a result you may find that additional tax will be deducted by your pension provider or employer from any occupational pension or salary payments that you receive.
Revenue have helpline numbers for people to call if they are worried about these letters.
The number for people in Dublin is 1890 333 425.
People in Cavan, Donegal, Galway, Leitrim, Longford, Louth, Mayo, Monaghan, Offaly, Roscommon, Sligo and Westmeath can call 1890 777 425
People in Clare, Cork, Kerry and Limerick can call 1890 222 425.
People living in Carlow, Kildare, Kilkenny, Laois, Meath, Tipperary, Waterford, Wexford and Wicklow can call 1890 444 425.
Note: 1890 numbers are LO Call – but will cost you more from a mobile phone and may not be included in your free call minutes on some landlines.
You can telephone Revenue on the alternative number 01 702 3011 instead of the 1890 numbers.