‘Pen­sion free­doms’ tax hits £1.8bn

The Sunday Telegraph - Money & Business - - News And Comment - Tele­graph Money Sam Brod­beck

Pen­sions savers have been over-taxed by as much as £1.8bn, can re­veal.

Peo­ple us­ing the pen­sion free­doms – a se­ries of lib­er­al­is­ing re­forms ap­ply­ing from April 2015 – to draw cash from their pen­sions are find­ing that HMRC taxes with­drawals as if they are the start of 12 equal pay­ments.

In most cases, how­ever, savers are mak­ing one-off with­drawals. This can re­sult in in­di­vid­u­als pay­ing thou­sands of pounds too much in tax.

Of­fi­cial fig­ures show £262m has been re­claimed but around £1.5bn has not, ac­cord­ing to anal­y­sis from fund shop AJ Bell. HMRC has in­sisted all over­pay­ments will be re­turned but could not say ex­actly when.

AJ Bell’s Tom Selby said: “Savers have been pick-pock­eted by HMRC with no cer­tainty over when they will get their money back.”

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