Pensioners claw back record £32m from HMRC

Pedro Gonçalves
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Pensioners claw back record £32m from HMRC

Pension savers have been forced to claim back more than £32m in overpaid tax from that the HMRC charged to people who had withdrawn money from their pension during the last quarter of 2019.

Over 10,000 pension flexibility claims forms were processed by HMRC in the final quarter of 2019 and a record £32.2m was repaid to those who had been charged emergency tax when they withdrew money from their pension, according to the latest figures from the taxman.

Jon Greer, head of retirement policy at Quilter, said pension savers have been forced to claim back an average of more than £3,000 per person.

The onus is very much on the government to ensure it is doing all it can to give pensioners their hard earned money back"

"The problem has nothing to do with anything pensioners have done wrong and lies solely with the PAYE system. HMRC's PAYE system is not built for one-off withdrawals from a pension and so does not fit with the new world of pension freedoms.

"People who make such withdrawals from their pensions, as is their right, may overpay tax and then wait 12 months or more to get the money back when HMRC automatically reviews tax liability." Greer said in a statement.

 Greer added: "The onus is very much on the government to ensure it is doing all it can to give pensioners their hard earned money back. An over £3,000 hit on your pension can be substantially detrimental to your lifestyle in retirement."

Those that have been overtaxed can fill in one of three different forms - the P55, P53Z and P50Z - which allow people to claim back money from HMRC mid-way through the tax-year.

The number of savers accessing their pensions once they hit retirement age has increased by 10%, according to figures from the Financial Conduct Authority (FCA).

A freedom of information request submitted to the FCA by Salisbury House Wealth revealed the number of 55 year-olds accessing their pension increased to 29,700 in 2018-19, from 26,900 in 2017-18. 

It also showed a record 7,683 55 year-olds accessed their pension in the second quarter of 2019.

 

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