Revenue to inform 115,000 pensioners of extra tax liability

 

AN ANNOUNCEMENT by the Revenue Commissioners that 115,000 pensioners will have to pay extra taxes due to an under-calculation of their liabilities, will cause further hardship for older people, according to Age Action.

Affected pensioners will be issued letters from the Revenue Commissioners within the next week informing them that they are liable for extra taxes this year.

The tax bills will affect people who are in receipt of both a State pension and a secondary private pension or salary.

The underpayments came to light after the Department of Social Protection sent records pertaining to 560,000 pensioners to the Revenue Commissioners.

It found that 115,000 taxpayers were liable to pay more tax in 2012 either because they had never previously declared their State pension to Revenue; had under-reported their pension; or because the taxpayer’s circumstances had changed.

In a statement last night the Revenue Commissioners said that in many of these cases the additional liability will be modest.

However, in some cases where the pension was not previously on record and a pensioner’s second income brought them into the 41 per cent tax bracket, the annual additional liability could reach €4,400 for a single person and €8,800 for a couple. However the statement noted that this would only apply in cases where the individual already had a significant income outside their State pension.

There were at least 2,500 instances where pension recipients were in receipt of annual incomes in excess of €50,000.

Approximately 325,000 pensioners remain unaffected because they either have no other income apart from their old age pension or are exempt from paying tax.

Another 20,000 taxpayers will pay less tax as their pension was overstated on Revenue’s records.

A further 100,000 records were in respect of people who pay tax on their State pension through the self-assessment system.

Age Action said that the announcement meant law-abiding citizens would now be left with tax bills at the start of a year when there have never been as many demands on their pensions.

Spokesman Eamon Timmins said it had caused anger and confusion amongst older people who had contacted the group’s offices yesterday.

“The commissioners are blaming the under-calculation on the fact that a variety of pensions paid were not included by the recipients in the calculation of their personal liability.

“Older people who contacted us today were at a loss as to how one arm of the State did not know what the other arm of the State was paying out. They had presumed these payments had been included.”

A range of benefits payable under the Social Welfare Acts are taxable but anyone over the age of 65 whose annual total income is less than €18,000 for a single person or under €36,000 for a married couple is exempt from income tax.