HMRC's Emergency Levy

Now that people have the freedom to access their pensions (subject to whatever restrictions/costs their pension providers choose to impose), one might have thought it would be plain sailing for all those 55+ looking to enjoy their money before being imprisoned in a care home.

Sadly, not quite.

For we must not forget HMRC.

The Telegraph reports that every saver who uses the new pension freedoms faces inaccurate tax charges, and will need to enter negotiations with HMRC to rectify the estimations.

For why?

People must supply a P45 to have the correct amount of tax deducted on their withdrawals. However, the forms are only issued when people leave employment or a pension has been paid out in full. Therefore those still in work, or who retired before the start of the tax year, will be unable to show a valid document and so must pay an "emergency" levy.

Even people withdrawing small amounts may have 45% tax applied to their fund.

Ros Altmann, an independent pensions expert, said:

"A lot of people are going to get a nasty shock when they see how much tax is going to be deducted from their funds. The tax office has made it very difficult for pension companies to apply the right amount of tax - many people will be very angry. 

This is clearly unfair and there should be a system where people can write to the tax office before they withdraw money."

HMRC is insisting on the P45 form because it is the only document that details how much tax someone has paid so far that tax year.
In a statement, an HMRC spokesman said:

"Claimants presenting their 2015/16 P45 to their pension provider will pay the correct tax. In the event that they don’t, any discrepancy will be settled within 30 days of HMRC being notified." 

Methinks 30 days is a tad optimistic, given how many people might be rushing to cash in some of their pensions!


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"