The latest figures from HM Revenue and Customs (HMRC) reveal that close to £57 million has been refunded to people who are paying too much tax who overpaid tax upon initially accessing their pensions.
This can mean a "nasty shock" when your first lump sum ends up being lower than you expect. Helen Morrissey, a retirement expert at Hargreaves Lansdown, has pinpointed the cause of these overpayments to HMRC's application of emergency tax.
The issue arises when HMRC mistakes a one-time pension withdrawal for regular income, thus falsely assuming the same amount will be received monthly.
Roughly two-thirds of Britain's 12 million pensioners (64%) pay tax on the money they have to live on in their retirement, a number that is set to grow by a further 900,000 this year due to the freeze on the income tax personal allowance, which is currently £12,570.
Read more on manchestereveningnews.co.uk
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