Tax on State Pension backdated

So I finally retired this year in June, being well over the minimum retirement age. Then I applied for State Pension. Two things happened: 1) I was taxed as if my employment continued (paying 50% Emergency Tax on the State Pension). I complained about that. 2) I received extra payments from DWP relating to the deferred previous years. This is now taxed as if I had received it in those years (when I was in full employment) but the money only dropped into my bank account AFTER I stopped working, i.e. had no other income. Why do I pay the high tax rate from previous years? If it can be backdated, can we backdate it to a year when I had no income? This is ridiculous! I understand why we have to pay taxes, but to calculate the taxes for years when this money was simply not available to me sounds rather unjust. What is the point of deferring state pension then?

Hi,

The UK taxes income and capital gains on the arising basis, that is, the income or capital gain is taxed in the tax year that it arises. The guidance below advises that any extra payments you get from deferring, could be taxed.  

Delay (defer) your State Pension

The rules for arrears of pension and pay, do not apply to the State Pension. As you chose to defer your State Pension the pension is now taxable in the tax year that it arises.

Thank you.

I have now (hopefully) set up a payment plan, as I cannot afford to pay over £3000 in one go. During my ordeal going through many web pages (most of which refer back to one I have already been) I discovered an interesting fact: despite having ONE unique taxpayer reference number (UTR) I do exist TWICE: one HMRC site (older layout style) recons I only owe them £0.60 and the newer one, with reference to the above mentioned State Tax, claims over £3000. On both sites I am logged in properly, with the SAME UTR, same address etc. So which one is it then?

Hi,

Please contact our Self Assesment team so we can check your account.

Self Assessment: general enquiries

Thank you.