Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
Home Finance Time to simplify system as pensioners reclaim £22m in overpaid tax from HMRC

Time to simplify system as pensioners reclaim £22m in overpaid tax from HMRC

by uma

 

  • Between 1 Jan and 31 March 2022 HMRC paid out £22,317,529 to people who overpaid tax when they accessed their pensions flexibly.
  • When someone accesses their pension flexibly, they are taxed on a “Month 1” basis which means they are treated as receiving that sum every month. This means they can overpay tax.
  • They must fill in one of three forms to reclaim the overpaid tax. During this period HMRC processed 7,412 of these forms.
  • Between 1 April 2021 and 31 March 2022 HMRC has repaid well over £100m in overpaid tax.

HMRC has published the latest pension flexibility statistics Pension schemes newsletter 138 ― April 2022 – GOV.UK (www.gov.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Pension Freedoms have been in place for several years now and the issue of overpaid tax has always been a problem, yet we continue to see thousands of people overpaying by hundreds of millions of pounds every year. There must be an easier way for people to be able to access their hard-earned pension cash without being clobbered by tax that they then need to work out how to reclaim. It’s a real fly in the ointment of the Pension Freedoms that have been embraced by society.

The data shows HMRC processed over 7,400 forms in the last quarter alone – over the entire pension freedoms period this must mount up to way over 100,000 applications as people reclaim their own money. It must come as anything from a nasty shock to those who aren’t expecting it, to annoyance and inconvenience for those who do.

Pension freedoms are embedded into the retirement landscape now and it is time the system was reformed to reflect changed behaviours and make it easier for people to access their pensions.”

 

Recent Post