State pensioners are being urged to withdraw just £1 from their pension pots to prevent a potential tax overcharge of up to £3,100. This simple action helps establish the correct tax code with HM Revenue and Customs (HMRC), enabling Department for Work and Pensions (DWP) claimants to avoid emergency tax deductions that can leave them out of pocket.
Emergency Tax Issues
Wealth management firm Quilter has reported that nearly 14,000 individuals were forced to reclaim overpaid tax in the first quarter of the year. Adam Cole, a retirement specialist at Quilter, highlighted that the average refund equates to £3,100. He commented: "That suggests fewer people may be caught by emergency tax, but when it happens the sums involved are larger, leaving retirees out of pocket while they wait for HMRC to return their own money."
Pension Credit Benefits
In addition to avoiding tax overcharges, state pensioners who receive Pension Credit can also save money on their TV licence. Those aged 74 and over who have applied for Pension Credit can reduce the cost to £0. TV Licensing states: "We'll update your payments to cover you until your 75th birthday, and then you'll be covered by your free licence. We'll confirm this in writing."
Furthermore, individuals who are blind (severely sight impaired) and can provide appropriate evidence are eligible for a 50% concession. Once the blind application is accepted, they can then apply for a free TV Licence.
What is Pension Credit?
Pension Credit tops up retirement income, and currently 7 out of 10 eligible pensioners already receive it. The average payment is over £83 per week. Eligibility may still apply even if you have a pension, savings, or own your home. Pension Credit not only allows you to claim a free TV Licence but also helps with housing costs, heating bills, Council Tax, NHS dental care, and more.
To check if you can get Pension Credit, call the Department for Work and Pensions on 0800 99 1234 (opening hours 8:00am to 6:00pm) or visit gov.uk/pension-credit.
