People could potentially be owed thousands of pounds by Her Majesty’s Revenue and Customs after an error. Anyone who took out cash from their pension may have overpaid in tax.
The HMRC has released figures which show around 7,000 pension savers overpaid by a £33million in total in the last three months. The average amount overpaid is £3,363 and happened because they were taxed as if it was their monthly income rather than a one-off.
The money should automatically be paid back by the HMRC - but there is no guarantee when this will happen, the Sun reports. Jon Greer, head of retirement policy at Quilter said: “HMRC will make a repayment automatically, however given that could take time to be processed it is best to make a repayment claim yourself to avoid waiting.
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“This emergency tax situation can be particularly frustrating for people trying to access their funds quickly, particularly if they don’t understand why it has happened.
“It arises due to an oddity of the PAYE system when people start to take money from their pension.”
Former Chancellor George Osborne changed the way pensions work so people can access their pension scheme and take out lump sums after the age of 55. This has been controversial and some removed money from pension schemes and put it in other ones which were not as good - or took too much out not leaving enough for their retirement.
Usually people can take the first 25% of your pension tax-free, and anything over that is taxed.
An HMRC spokesperson said: “Following the introduction of pension freedom in flexible pension payments in 2015, HMRC introduced a rapid refund process to enable those who had paid too much tax to reclaim and receive payment within 30 days.
“While HMRC keeps all areas of tax administration under review, there are currently no plans to change this process.”
For more information on claiming your money back visit the HMRC website by clicking here.
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