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

SSAS: Practitioner-only and professional trustees – what's the difference?

SSAS: Practitioner-only and professional trustees – what's the difference?

'Robust governance and informed decision-making are critical'

Caitlin Southall
clock 27 January 2026 • 5 min read
'Caution' required over potential use of pensions for house deposits

'Caution' required over potential use of pensions for house deposits

Research finds the number of retirees living in rented property could treble by 2040

Martin Richmond
clock 23 January 2026 • 4 min read
Hidden 'systemic barriers' perpetuate gender pensions gap

Hidden 'systemic barriers' perpetuate gender pensions gap

Entrenched barriers, not lack of financial confidence to blame

Jenna Brown
clock 23 January 2026 • 3 min read