Latest HMRC statistics show £37million repaid to individuals overtaxed on pension freedoms withdrawals between 1st July and 30th September 2017
Staggering £262million has now been repaid to savers charged ‘emergency tax’ since pension freedoms launched in April 2015
Figures only cover those who have filled out complex official forms (P55, P53Z, P50Z) so true figure will be significantly higher
Tom Selby, senior analyst at AJ Bell, comments:
“While hundreds of millions of pounds has been successfully reclaimed by individuals overtaxed on pension freedoms withdrawals, this could be the tip of the iceberg. Many of those affected – particularly basic rate taxpayers and people who don’t take advice - will have little or no experience dealing with tax matters and might not even know the reclaim forms exist.
“As a result they could end up getting thousands of pounds less than they thought they would when they made the withdrawals. While HMRC says eventually people’s tax position will be rectified even if they don’t fill out the relevant form, this will be no use to someone who needs the money today to pay social care costs or help fund their kids’ tuition fees.
“The Government needs to urgently review this policy – it is manifestly unfair to lumber savers who are using the freedoms in the way the Government intended with whopping great tax bills.”
Source: HMRC pension scheme newsletters