Latest News

Tax Refund for Newstart Leavers receiving BT pension

17 March 2008

The CWU has been pursing with BT concerning the taxation of NewStart payments made to those who left taking a NewStart payment and immediately received their BT pension and where applicable a lump sum.

In 2001, before the launch of the Newstart Programme the Inland Revenue (now HM Revenue & Customs - HMRC) agreed that the income tax treatment was as follows:

Where the employee’s BT pension did not come into payment immediately on leaving the Newstart Leaver Payment was taxable under the special rules about termination payments. Accordingly, the first £30,000 of the Newstart Leaver Payment was exempt from income tax.
Where the employee’s BT pension - and tax-free lump sum (if applicable) - did come into payment immediately on leaving the Newstart Leaver Payment was taxable in full.

As a result of representations HMRC have reviewed the issue and now agree that treating a NewStart leaver payment as taxable in full cannot be sustained. HMRC has agreed that any individual who received a NewStart leaver payment that was taxed in full or re-applied for and was paid the over 59’s enabler may be entitled to a repayment of income tax.

BT has identified all NewStart leavers who fall into this category and has passed the details to HMRC who will write to each individual affected by the end of April 2008. Individuals who are affected do not need to take any action until they are contacted by HMRC. BT will also write to the individuals concerned.

HMRC may pay a “repayment supplement” to individuals in respect of interest on the sums refunded. It is also understood the refund of tax in this situation will also encompass those who have died in retirement and whose estate should therefore benefit from any refund which is made.

Neither BT, HMRC or the union will be able to provide any information beyond what is contained in the company’s letter. Taxation is a matter between the individual and HMRC and is not a matter on which the CWU is able to provide advice or representation.

In the event that individuals have not had contact by HMRC by the beginning of May, they should contact HMRC directly at: HMRC, North Wales Area Compliance, Plas Gororau, Ellice Way, Wrexham Technology Park, Wrexham, LL13 7YY.