U Turn

In May I noted that HMRC's stance on pension drawdowns for those aged 50-54 was "illogical".

HMRC had viewed transfers of drawdown funds from one pension provider to another as "unrecognised", and liable to a maximum 55% charge.

Now HMRC have done a full U turn, and issued the following statement:

"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."

Changes will be backdated to cover transfers on or after 06 April 2010, when the minimum pension age change became effective.

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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