‘Pension freedoms’ tax hits £1.8bn
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.”