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Posted Fri, 22 Dec 2023 21:25:51 GMT by garyw5988 williams
Basic rate tax payer since retiring, but with inflation-driven pension increases and frozen tax bands I expect to breach 40% tax this year. So recent receipt of NHS pension Goodwin judgement arrears and interest circa £4800 back to 2017/18 whilst welcome brings dismay in that if treated as incurred in this tax year would incur extra approx £800 tax (on top of that for 20% band). “HMRC Admin 18” helpfully posted for a similar issue (pay in arrears): “From the perspective of an employee who receives arrears of pay, the arrears are treated as received (and therefore taxable) in the year in which the individual became entitled to the payment, rather than when the payment was actually made. Please refer to the guidance at EIM42290.”  I became entitled to my Goodwin payment in tax years 2017/18 to 2023/24 inclusive and can show that (apart from 2023/24 portion) the additional sums would have been well inside my basic rate limit each tax year. But how do I include that in my 2023/24 tax return please, or is there some other form to use? Many thanks.
Posted Fri, 05 Jan 2024 15:38:23 GMT by HMRC Admin 5

The payment is taxable in the year the payment is made and you would therefore include this in the relevant tax return.
You can opt to have the payment reallocated to previous years if this is more beneficial to you and you would need to do this in writing.
You need to supply a breakdown from the employer on the years/amounts the payment refers to and HMRC will make the necessary adjustments.

Thank you

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