HMRC, which is now the tax arm of the Labour Party government, has moved to £44 MILLION in overpaid tax after pensioners were hit hard by an “outdated” system.
HMRC is sending free money to state pensioners in the post after they were hit hard by tax bills. HMRC, which is now the tax arm of the Labour Party government, has moved to £44 MILLION in overpaid tax after pensioners were hit hard by an “outdated” system.
Between January and March, the tax authority processed 15,274 repayment claims from pensioners who had been overtaxed. The average refund amounted to nearly £3,000 per claim, according to retirement specialist Jamie Clark from Quilter.
Clark said: “The PAYE system, while serving its purpose for regular income, has often applied emergency tax codes to one-off withdrawals, resulting in a large number of overpayments.”
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Clark said: “HMRC’s new tax coding process should not only reduce the administrative burden on savers, but with hope it will also minimise the number of overpayments being made in the first place.”
Tom Selby, Director of Public Policy at AJ Bell, said the current system “continues to hit hard-working savers in the pocket,” and warned “too many people are still being overtaxed because of the Revenue’s outdated approach.”
He added: “These figures are likely to be only the tip of the iceberg.” Clark said: “Many people are still reliant on their pension savings to manage financial pressures.
“And any hasty decision to access these funds could not only result in unintended – and often unexpected – tax consequences, but they could also hamper longer term financial plans.”
He said: “Financial advisers can ensure you are making any withdrawals in the most tax efficient way possible, and will also help make sure you remain on track to reach any long term goals.”
He concluded: “With hope, we will see the number of repayment claim forms being process fall from here on out thanks to HMRC’s efforts to improve the system, but there is still a long way to go to ensure it works seamlessly.
“In the meantime, it is likely that some retirees will still face significant overpayments and subsequently the often arduous task of reclaiming their money.”
