Thousands of savers overcharged tax on pension withdrawals

7th September 2017 Savings and investments Nicola Roby

Thousands of savers who have made one-off pension withdrawals under Pension Freedoms have paid too much tax according to research from the Telegraph. If you think this may be applicable to you don’t hesitate to contact our Accountants in Bolton for more advice.

This HMRC error has seen individuals assigned a tax code as if they are to regularly withdraw from their pension, rather than a one-off withdrawal, therefore impacting the amount of tax paid by the individual.

The research suggest that almost 250,000 individuals made one-off withdrawals from their pension during the previous tax year, following the recent legislation under “pension freedoms” which allows savers more flexibility to withdrawals.

Of the 242,000, less than 20% have completed the forms to reclaim the overpaid tax.

On a pension withdrawal of £10,000, which should effectively be tax free, savers could find themselves paying £3,099.46 if the erroneous “Month 1” code was used.

Nicola Roby, Director at CHW said: “People are still a little unsure when it comes to Pension Freedoms, and this will further aggravate savers. If you took money out of your pension, and the Month 1 code was applied, we recommend that you get in touch to start the reclaim process.”

To see if your eligible and to claim back what’s rightfully yours, contact our Accountants in Bolton via here.

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