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Pension Freedoms and Tax

When the new pension freedoms were introduced last year they were hailed as a groundbreaking change to the way in which pensions were viewed and accessed. However, the new freedoms also gave rise to concerns about whether people were being provided with enough information to enable them to make a balanced withdrawal or investment decision and about the tax implications of such decisions.

These tax concerns would appear to be justified, given the figures recently released by HMRC. In a number of instances those withdrawing money from their pension pots have been allocated an emergency tax code which has been applied to the withdrawal. It is then up to the individual to contact the tax authorities and claim a refund by using one of three different forms based on individual circumstances.

According to HMRC, in the last quarter of 2015 more than 8,000 individuals completed such forms resulting in tax refunds of some £34 million. In total, since pension freedoms were introduced more than 23,000 people have claimed refunds in this way but there are concerns that many more individuals have yet to claim; either because they are unaware of the need to do so or because they have been put off by the complexity of the claim forms.

If you’re looking to create a pension portfolio, or if your situation has changed and you may therefore need to review your existing portfolio, contact Beckworth by using one of the links on our website.