Celebrations on ice: Pensions over-taxation issue not fixed yet

'I'm keeping my celebrations on ice as the biggest issue is still unresolved'

clock • 4 min read

Lisa Webster explores HMRC's shifting stance on pension over-taxation and says while progress is welcome issues still remain...

Exuberant headlines followed the publication of HM Revenue & Customs' (HMRC) January pension schemes newsletter as the revenue finally appeared to be taking steps to ensure pension withdrawals are taxed correctly.  The change being made is welcome, and will improve the situation for many, but I'm keeping my celebrations on ice as the biggest issue is still unresolved. At the heart of the pension over-taxation issue, is the fact that HMRC insists that pension providers apply the relevant tax code to the first pension withdrawal on a "month one" basis. This is irrespective of whether it...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

 Rachel Vahey: Advisers and clients still need clarity on NMPA increase

Rachel Vahey: Advisers and clients still need clarity on NMPA increase

'HMRC has had years to clear this up but has sat on its hands'

Rachel Vahey
clock 11 March 2026 • 4 min read
Pension freedoms exposed a longevity problem we still refuse to confront

Pension freedoms exposed a longevity problem we still refuse to confront

'The gap between product complexity and consumer understanding is not narrowing'

Julia Fintz
clock 11 March 2026 • 4 min read
Complex Hartley Pensions administration continues amid 'misappropriated funds' investigation

Complex Hartley Pensions administration continues amid 'misappropriated funds' investigation

Administration expected to conclude in 2027

Isabel Baxter
clock 10 March 2026 • 3 min read