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Where Taxpayers and Advisers Meet

Tax on backdated annuity payment

Joined:Fri Jun 07, 2024 11:44 am
Tax on backdated annuity payment

Postby MrsBash » Fri Jun 07, 2024 11:59 am

My adult Son received a backdated lump sum annuity taxed payment in the 2023-24 tax year. The payment related to payments due from March 2022, so covering 3 tax years. If he uses the P60 figure on his SA return (showing full backdated payments) hes taxed at higher rate & has child benefit deducted from overpayment. How do we correct the return to show the backdated amount (already taxed) related to payments due over 3 tax years? He completes a SA return as he has a very small amount of self-employed income to declare. I've phoned IR a number of times, waited for ages on each call & been cut off each time.

Joined:Wed Jun 05, 2024 10:06 am

Re: Tax on backdated annuity payment

Postby johnsamir » Mon Jun 10, 2024 6:57 am

To spread the backdated lump sum over three tax years, use Lump Sum Averaging Relief. Divide the lump sum by 3, then enter the apportioned amount for each year in the 'Additional Information' section of the SA return. Provide an explanation of the payment and the periods it covers. Keep supporting documentation ready.

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