The latest figures from HM Revenue & Customs (HMRC) have revealed that the Government has repaid around £30 million to savers who were overtaxed on pension freedom withdrawals during the final three months of 2018.
The new data adds to existing research, which shows that since the introduction of the pension freedoms in April 2015, more than £400 million has been overpaid in tax and since reclaimed.
Extrapolating the information further shows that the average amount reclaimed is around £2,312, but experts are concerned that more people may be affected without realising.
HMRC has refused to change its approach to the ‘emergency’ taxation of money withdrawn under the freedoms, which has affected thousands who have accessed their own money flexibly.
Experts believe that the fact that few pensioners accessing their money have had to directly report their affairs via a tax return in the past due to PAYE, has led to more errors and overpayments.
Former pensions minister Steve Webb has previously said that “HMRC is perfectly happy to overtax tens of thousands of people each year and make them jump through hoops – having to choose between three different forms to complete – and then wait to get their money back. This is a system run for the convenience of HMRC, not the taxpayer.”