Pensioners hit by ‘emergency’ £55,000 tax
“Pensioners are facing substantial emergency tax charges, some exceeding £55,000, resulting in over £1 billion in overcharges since 2015.
PENSIONERS have been charged hefty amounts in emergency income tax following withdrawals from their pension pots. These charges, totaling over £1 billion since 2015, stem from the introduction of “pension freedom” rules. These rules allow savers to withdraw varying amounts from their pensions but subject them to an emergency tax rate, assuming monthly repetition of one-off withdrawals. Consequently, pensioners are significantly overtaxed, necessitating either refund requests or waiting for tax system corrections.
According to Royal London, the largest HMRC refunds averaged £54,185, with some pensioners reclaiming over £10,000. Despite entitlement to tax-free lump sums from age 55, pensioners face overtaxation due to flawed assumptions by HMRC. The tax system often levies emergency income tax, delaying potential refunds until the end of the tax year.”
Quotation by Nigel Holland.
- Pensioners face hefty emergency tax charges.
- Over £1 billion overcharged since 2015.
- Flawed assumptions by HMRC lead to overtaxation.
- Refunds may take months to process.
- Impact on pensioners’ finances and retirement planning.