The way HM Revenue & Customs (HMRC) taxes pension withdrawals is finally being overhauled ten years after over-taxation issues were first raised by the industry.
Pensioners have been over-taxed by £1.3bn in the years following the introduction of pensions freedom which allowed withdrawals from defined contribution pots from age 55 rather than being forced to buy an annuity. Since then HMRC has applied emergency tax codes to pension withdrawals. This meant people ended up paying more than necessary and had to claim it back. LCP partner and former pensions minister Steve Webb said since they system was put into operation more than 47,000 claims had been made for refunds totalling £1.37bn. LCP pointed out that in the last three months, nearly ...
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