In Q4 2022 £45m was re-paid to pension holders, higher than Q3 2021 when it was £42m. Since pension freedoms were introduced in April 2015, a mammoth £970m has now been re-paid to customers by HMRC.
Andrew Tully, technical director, Canada Life commented: “The latest HMRC numbers just re-emphasise the complexity of the tax position for those taking lump sums out of their pension. Almost eight years on from the introduction of the pension freedoms there must be a better way to administer the tax position around pension withdrawals which would mean HMRC is not processing refunds of over £40m in just a three month period, and close to £1 billion since 2015.
“For customers making a pension withdrawal for the first time, a workaround is to initiate a small withdrawal of say £100. That will generate a tax code from HMRC which the pension provider will apply to any subsequent withdrawals. That will result in the tax being taken at source being far more accurate in many more cases, reducing the paperwork but equally importantly the customer receiving a more accurate withdrawal.”
In total, HMRC has re-paid the following:
Calendar years
2015 (3 Qs) £ 68,038,073
2016 £ 107,613,551
2017 £ 107,083,520
2018 £ 120,007,964
2019 £ 165,062,629
2020 £ 125,092,581
2021 £ 143,065,446
2022 £ 134,122,195
Total £ 970,085,959
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