Former pensions minister Steve Webb branded HMRC “outrageous” after it revealed it had to repay more than £26m in just three months after excess income tax was taken from savers making use of pension freedom.
HMRC’s latest Pension Schemes Newsletter showed the government had to repay £26,835,357 to savers on pension funds withdrawn using pension freedoms.
It said a total of 10,576 forms had been processed from 1 April to 30 June, and were a mixture of P55s, P53Zs and P50Zs.
Now Royal London director of policy, Webb said: “It is outrageous that in just three months HMRC has overtaxed people by more than £26m. It cannot be acceptable to take thousands of pounds per person in excess taxes and then expect people to have to claim that money back.
“The rules need to be changed so only basic rate tax is deducted and any extra tax due is collected through the normal tax return process. This would be a fairer system.”