Retirement Annuity Tax Credit

JAM3114

Anyone know what happens if you didn't cancel your tax credit when you stopped paying your private pension contributions?
My husband stopped his pension about 3yrs ago but never sorted the tax credit & has been getting this also.
The annual credit is 2040 will he have to pay 3 yrs of that back? 6120??? Don't know what to do - they've confirmed we need to send in email/letter to cancel tax credit but want to know when he stopped paying --- help so unsure of what this means. We've no spare income at present so to have to pay this back will be an absolute nightmare

nompere

Firstly, yes, €2040 of tax has been underpaid each year. It's possible that other credits might have been miscalculated so the actual underpayment might not be a much as you fear.

Secondly, some of Revenue's attitude will depend on whether you actually made a claim for relief, or it was just that a credit was carried forward from year to year. Making a claim to which you are not entitled is much more serious than not asking for a credit to be removed.

Thirdly, talk to Revenue, or to a professional (if you can afford one). Now that the process has started it's not going to go away; it will have to be sorted out. There's no point in pretending that solving this is going to be easy. The least painful solution will involve a reduction in tax credits - you can negotiate the length of time with Revenue over this, and that sort of solution almost never involves any sort of interest.

Much more painful is if Revenue just issue balancing statements and look for all the tax in one go. They can escalate that to the courts and Revenue Sheriffs very quickly if they are so minded.

I do wish you well in this.

JAM3114

Thanks I had a better look and it's only 408a year so we're looking into what was paid as some years premium increased but claim didn't maybe we can some offset - needs to be sorted now but as you said it was a tax credit carried forward each year - hopefully it won't be too harsh

nompere

If the pension payment (or non-payment) was €2,040 per annum and the credit was €408 (which isn't what you said in your first post, then the likely underpayment is in the region of €1,200 over three years.

Revenue will almost certainly agree to collect this through your tax credits over two years, which is equivalent to €50 per month. If you can demonstrate that it will be difficult to manage even that you might find that they would consider collection over three years, though that would be unusual.