On Tuesday I noted that HMRC had issued a statement announcing a U turn on rules relating to drawdowns, by those aged between 50-54, on their pensions:
"The Government intends to bring forward regulations to remove the unauthorised payments tax charge where an individual aged 50 and over but under 55 transfers their pension in payment to another pension provider."
However, Citywire reports that there is still some confusion over this issue. They quote Skandia pension development manager, Adrian Walker, who warns that 40% charges would apply to lifetime annuity purchases made from income withdrawal funds before age 55.
"HMRC has confirmed that the draft regulations announced in that release do not cover the unauthorised payment charge that will be generated if an individual looks to purchase a lifetime annuity or scheme pension from an income withdrawal fund prior to age 55."
It is expected that HMRC will make a further statement on this matter, so as to end the confusion.
As I noted on Tuesday all of this fuss could have been avoided, if HMRC had listened to the advice given by finance professionals to it at the time.
Tax does have to be taxing.
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HMRC and Confusion,
ReplyDeleteIts like Fish and Chips, salt and pepper, yin and yang.
Government changes rules on draw-down pensions, not HMRC.
ReplyDeletePlease learn the difference - we've got another 5 years of this con-dem coalition
8 July 2010 22:20 Poster.
ReplyDeleteGovernment changes rules on draw-down pensions, not HMRC.
Are you sure about that?
For clarity:
ReplyDelete1 New rules were introduced in April (by the previous gov).
2 The rules were ambiguous and HMRC were told that they would lead to problems:
AJ Bell marketing director Billy Mackay says his company spotted there might be a problem in the legislation months ago, with many providers warning the wording of the new rules was ‘ambiguous’, but HMRC assured him it “wasn’t an issue”.
Mackay says: “For HMRC to give a different answer now is unfair and potentially traps hundreds of individuals in expensive, outdated pension plans.”
http://www.ifaonline.co.uk/professional-adviser/news/1636244/hmrc-ruling-severs-clients-pension-benefits-for-years
3 HMRC finally realised that there would be problems and, the new gov is to draft new rules to end the ambiguity caused by poor legislation and HMRC "deaf ears"
etc
2 The rules were ambiguous and HMRC were told that they would lead to problems:
ReplyDelete....
3 HMRC finally realised that there would be problems and, the new gov is to draft new rules to end the ambiguity caused by poor legislation and HMRC "deaf ears"
Do you not see that this is in fact caused by the different interpretation by the government of the time - not by HMRC?
This is what happens when govt (on either side) interferes too much in the business of its departments: The private-sector implants that earn 10x as much as the normal workers start brown-nosing the ministers so much that it interferes with the interpretation of a statute.