Steve Webb claims HMRC will 'over-tax' pension freedom users during crisis

HMRC refutes claim

clock • 2 min read

Pensions consultancy Lane Clark and Peacock (LCP) has called out HM Revenues and Customs (HMRC) tax policy on flexible drawdown as "unacceptable", claiming it could lead to draconian tax penalties during Covid-19.

Research by LCP suggested that the tax penalties imposed by HMRC for drawing from pension pots would become more severe during the current crisis, as investors looked to take lump sums.  Since the introduction of pensions freedoms in 2015, when over-55s could access their pensions in a flexible manner, rather than using it to buy a regular income. But for those who are drawing their pensions for the first time in this way, the excess tax can amount to thousands of pounds. HMRC figures show that around 330,000 people over 55 have accessed their pensions flexibly during the first qua...

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 Your profession

FCA to deliver 'fewer and faster' enforcement outcomes this year

FCA to deliver 'fewer and faster' enforcement outcomes this year

Therese Chambers says the watchdog is prosecuting more people than ever before

Sahar Nazir
clock 23 October 2025 • 2 min read
Reeves' rumoured ISA reforms risk 'harm' and diversification issues

Reeves' rumoured ISA reforms risk 'harm' and diversification issues

Concerns over rumoured £10k cash ISA cap and potential UK equity mandate

Sahar Nazir
clock 22 October 2025 • 5 min read
Rachel Reeves to launch National Insurance charge for LLP users - report

Rachel Reeves to launch National Insurance charge for LLP users - report

Part of plan to target the wealthy

Isabel Baxter
clock 22 October 2025 • 2 min read