SAM110271 | Repayments: issue repayment: in-year repayments - small pension taken as a lump sum (formerly known as trivial commutations) and Flexible Pension Payments (Action Guide)

To deal with an in-year repayment claim in cases where a small pension is taken as a lump sum, follow steps 1 - 4 below. The guide is presented as follows

Initial Action - Steps 1 - 2
Repayment not due - Step 3
Repayment due - Step 4

Initial Action

1. When you receive a claim for an in-year repayment in case where a small pension is taken as a lump sum you should issue a form P53

For Flexible Pension Payments, a form P50Z, P53Z or a P55 should be issued depending on the individual’s circumstances. For further information see SAM110270

2. On receipt of the form you should calculate the liability for the year based on the income shown on the completed form and on the P45 (parts 2 and 3) using the R37 calculator on SEES. Note: A form P45 will not be required where a form P55 has been completed

If a continuing source of income is shown on the form P53, P53Z or P55 against which a code is being operated, use ‘Week 1 calculators & Tax Tables’ on the SEES menu under ‘Other Calculators + Forms + NPS’ to estimate the amount of tax that will be deducted on that source by 5 April and give credit for it in the calculation

Repayment not due

3. If no repayment appears due

• Write to the customer using SEES letter SA529 and advise that based on the estimate of income provided, no repayment is due at this time

Repayment due

4. If the calculator shows that a repayment is due

• Use function CREATE FREESTANDING CREDIT to add the credit to the SA record

• If the ‘No repayment’ signal is already set, first follow the guidance at SAM113011

• If the repayment can proceed, use function ISSUE REPAYMENT FROM OVERPAID BALANCE to create the repayment on the record

• Make the following SA Note: ’FSC In-year repayment of £XX.XX made in response to P53 Small Pension taken as a lump sum claim/P50Z, P53Z or P55 Flexible Pension Payment. Papers filed in DRXX/XX’

• Where the CY-1 return has not yet been received, set the Auto Closure Inhibited signal to ensure that the SA record is not automatically closed

• Make a note in Contact History on the PAYE Service to show ‘In-year repayment’

• Send a copy of the R37 calculation to the customer/agent with SEES letter SA529 advising that the repayment will be issued shortly and must be shown on the return under ‘Tax Refunded or set off’. Keep the file copy of the R37 with the repayment papers to be filed away

• Set the ‘No repayment’ signal after confirming the repayment has been issued and update SA Notes giving the full reasons why the No Repayment signal has been set. This will ensure that the repayment amount is not issued twice because the customer has failed to enter the in-year repayment on their return