💰 Good news for pensioners! Thousands are seeing big refunds from HMRC after being overcharged tax on their pension withdrawals. Some are even getting back over £100,000!
This happens because of the pesky emergency tax codes used when you start withdrawing from your pension. Recent data shows that in the 2023/2024 tax year, around 60,000 pensioners claimed refunds, with an average payback of £3,342. Notably, a lucky 25 pocketed an average of £106,900.
Pension expert Clare Moffat finds it incredible that some first-timers faced emergency tax refunds well over £100,000, turning well-laid plans upside down. But don’t worry, HMRC is updating its system to deliver refunds faster, although higher rates might still be applied initially.
For those planning their pension withdrawals, remember the first 25% you take out is tax-free, but expect a tax hit on the rest due to the HMRC’s current method. This has become an even more pressing issue with changes to inheritance tax laws coming in 2027, prompting many to withdraw more of their funds now.
HMRC aims to tackle this by adjusting tax codes more swiftly for first-time private pension income receivers, hopefully making these hefty overcharges a thing of the past. 💸
Stay informed and ensure you’re not missing out on any refunds due! 🎉