In January 2012, many older individuals with PAYE tax status, who had both State and Private Pension incomes, received letters from the Tax Office regarding the possibility of underpaid tax liabilities. Many of these taxpayers had their tax credits adjusted for 2012, meaning their tax credits were "updated" so that tax was effectively paid at source on both pension incomes for 2012 and onwards.
At that time, the Revenue's "campaign" seemed to end, with no further mention of potential underpayments for 2011, 2010, or any earlier years. However, I have been advised that the Revenue "campaign" has now resumed. Last week, new letters were issued concerning possible underpayments for 2011 and earlier years.
This issue primarily affects individuals aged 68 and over who have not been filing annual Income Tax (IT) Returns and/or who have not been paying tax on their State Pension—whether innocently or deliberately. Those who have been filing Tax Returns each year need not be concerned.
The implications of this could be very costly if pursued, especially for anyone who:
- a) Has a Private Pension income of around €50,000 per annum or more, and
- b) Has not been paying tax on their Department of Social Protection (DSP) Pension income for earlier years.
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