What is form P53Z? Form P53Z explained

Form P53Z is made available by HMRC for taxpayers who have overpaid tax on a flexibly accessed pension lump sum.

If you take a pension lump sum by flexibly accessing your pension pot your pension provider will collect tax before paying you.

Typically HMRC allows 25% of a pension lump sum to be taken tax free but after that you will usually pay tax on the remainder.

The amount of pension tax deducted from your lump sum is often at the emergency tax rate which can mean you overpay tax.

As this can be up to a rate of 45% regardless of your usual tax band it can be a substantial sum.

Using form P53Z allows you to claim back the overpaid tax on your pension withdrawal from HMRC in the quickest time possible.

HMRC expects you to claim back your pension tax rebate by using the correct HMRC form for your specific circumstances.

Should I complete form P53Z?

You need form P53Z if you are retired and have taken your full pension pot amount as a ‘flexibility’ payment but also have some other taxable income.

This could be savings, salary or taxable benefits (Employment and Support Allowance, taxable Incapacity Benefit, Jobseeker’s Allowance).

The form P53Z should also be used if you have overpaid income tax on a serious ill health lump sum.

When you should not use form P53Z

  • If you have emptied your pension pot as a lump sum and do not have any other taxable income, then you need form P50Z
  • If you have not withdrawn your entire pension pot and are not receiving regular payments HMRC normally needs form P55.
  • If you have overpaid tax on a small pension lump sum that you’ve received in the current tax year you should use form P53.

How do I submit a form P53Z?

HMRC gives you three options to submit your P53Z and you will need proof of your other earnings for example a P60 end of your certificate or a form P45 if you have left employment.

P53Z by post:

You can simply print off the form, handwrite it and post it to HMRC – the good, old-fashioned way.

Or you can fill it in ‘on screen’ and then print and post.

The address you need is:

Pay As You Earn
HM Revenue and Customs

P53Z online:

You can complete and submit form P53Z using your GOV.UK account so the whole process is done online. If you don’t have a government gateway account it should take about 15 minutes to set up.

When do I receive by pension tax rebate?

If everything is in order it takes HMRC approximately 30 days from receipt of your P53Z application which is usually better than having to wait until the end of the tax year.

Is there a way to pay less pension tax on a lump sum?

Under certain conditions, you can avoid paying tax on your pension income or utilise methods to reduce the taxable portion of your pension lump sum.

One approach to minimising tax on pension lump sums is to restrict withdrawals to only the necessary amount for each tax year.

If you are drawing pension income or taking a pension lump sum, sometimes you can lower tax by ensuring your total income remains below higher tax rate thresholds.

Pension tax support and information

Before withdrawing a lump sum from your pension it would be a good idea to gather as much information as possible to ensure you make informed decisions aligned with your retirement plans.

Depending on the nature of your pension query, you can seek assistance from your pension provider, HMRC, or the tax charity Tax Help for Older People.

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