Shock excess tax bills 'on the cards' over retirement withdrawals

Mark Battersby
clock • 2 min read

New figures from HMRC have revealed £794m has now been repaid to people overtaxed on retirement withdrawals since the pension freedoms were introduced in April 2015. AJ Bell has highlighted the main problem behind the figures is that HMRC insists savers flexibly accessing taxable income from their retirement pot for the first time are taxed on a ‘Month 1' basis. This means their usual tax allowances are divided by 12 and applied to the withdrawal - meaning people could be hit with shock tax bills running to thousands of pounds. Those who only make one withdrawal in the tax year nee...

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