Data from HM Revenue and Customs (HMRC) shows that savers have been over-taxed more than £400m since the start of pensions freedoms in April 2015. This comes in the form of income tax which is deducted when individuals make lump sum withdrawals from their pension fund after the age of 55.
HMRC routinely taxes people using an ‘emergency’ tax code that results in large over payments which then have to be recovered by individual taxpayers by completing one of three different claim forms depending on their circumstances. The data shows that since Pension Freedoms in April 2015, HMRC have had to pay back tax on 174,000 occasions, with the total amount repaid standing at £402 million. Many pension specialists believe that the system should be run for the convenience of taxpayers, not the convenience of HMRC.
If you have withdrawn a lump sum from your pension and suffered ‘emergency’ tax on the withdrawal and are unsure which form you are required to complete to claim the tax back then please do not hesitate to contact the office to speak to one of our highly qualified advisers.
Many individuals who access their pension fund by withdrawing a lump sum do not fully understand the tax consequences of doing so. Advice in this regard is essential to ensure that you withdraw funds from your pension in the most tax efficient and appropriate way. There are a number of ways in which an individual can withdraw benefits from their pension. Please do contact the office to arrange a mutually convenient no obligation appointment with one of our highly qualified advisers if you would like to discuss the options available to you.
