New PAYE system could end overtaxing pensioners

In a consultation closing toady, HMRC proposes a system of recording income monthly in order to calculate tax in real time as standard. Currently, details of income are reported to HMRC once a year, creating difficulties leading to over and underpaid tax. "Standard Life is very supportive of the proposed system," says John Lawson. "We use PAYE to pay annuities, and to do that we have to use emergency tax codes, which are based on one month's income. This means pensioners are very often overtaxed. "Many pensioners find themselves overtaxed, if they realize it at all, and do not k...