{"id":96767,"date":"2025-08-26T09:06:16","date_gmt":"2025-08-26T09:06:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/96767\/"},"modified":"2025-08-26T09:06:16","modified_gmt":"2025-08-26T09:06:16","slug":"thousands-of-pensioners-claim-back-more-than-10k-after-being-overcharged","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/96767\/","title":{"rendered":"Thousands of pensioners claim back more than 10k after being overcharged"},"content":{"rendered":"

Thousands of pensioners have reclaimed more than \u00a310,000 after being overtaxed on their pension withdrawals, fresh analysis reveals.<\/p>\n

A small number of individuals in the UK received refunds exceeding \u00a3100,000.<\/p>\n

The HMRC data, secured by Royal London via a freedom of information (FOI) request, demonstrates a rise in the volume of refunds sought in 2023-24.<\/p>\n

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Pension freedoms, introduced in 2015, provided those aged over 55 with various choices regarding how to utilise their defined contribution (DC) pension fund.<\/p>\n

Typically, individuals can withdraw up to 25 per cent of their pension as a tax-free lump sum, whilst the remaining 75 per cent faces taxation as income, as reported by City AM<\/a>.<\/p>\n

However, an “emergency” rate applies to pension withdrawals, with HMRC presuming it represents the pensioner’s monthly earnings for the remainder of the tax year.<\/p>\n

This arrangement means individuals could face excessive charges when making one-off withdrawals.<\/p>\n

Around 60,000 pension savers sought refunds during the 2023-24 tax year, representing a 20 per cent increase from roughly 50,000 a year earlier, Royal London’s figures indicated.<\/p>\n

Around 11,700 pensioners recovered \u00a35,000 or more, including 2,400 who received refunds surpassing \u00a310,000.<\/p>\n

The typical refund totalled \u00a33,342, marking an increase of \u00a3280, or nine per cent, compared to 2022-23. The highest 25 refunds averaged \u00a3106,900, the data confirmed.<\/p>\n

Clare Moffat, pension specialist at Royal London, said: “It’s incredible to think that some people withdrawing from their pension for the first time were entitled to emergency tax refunds in excess of \u00a3100,000.<\/p>\n

“Not only do these taxes usually come as a massive shock, the unexpected tax amount can also scupper people’s carefully laid plans.<\/p>\n

“HMRC recently announced an overhaul of its emergency taxing codes on pensions, which it promises will deliver quicker refunds, but that doesn’t mean people won’t still be charged the higher rate in the first place.”<\/p>\n

From April, HMRC altered its procedure so that tax codes are automatically updated for individuals newly receiving a private pension.<\/p>\n

Moffat stated that the government’s decision to subject unused pension funds to inheritance tax from 2027 means “more and more people are considering dipping into their pension pots while they are alive” to make substantial lifetime gifts to loved ones.<\/p>\n

Pensions are currently exempt from inheritance tax and are therefore viewed as a tax-efficient method of transferring wealth.<\/p>\n

“A rise in large lump-sum withdrawals will likely mean an even greater spike in emergency taxes on those withdrawals,” she said.<\/p>\n

“So, the problem of emergency taxes isn’t going away, and there’s a chance it could get worse.”<\/p>\n

Approximately \u00a31.4bn has been refunded since 2015, according to the figures.<\/p>\n

HMRC has been approached for comment.<\/p>\n

Like this story? Why not sign up<\/a> to get the latest business news straight to your inbox.<\/p>\n","protected":false},"excerpt":{"rendered":"Thousands of pensioners have reclaimed more than \u00a310,000 after being overtaxed on their pension withdrawals, fresh analysis reveals.…\n","protected":false},"author":2,"featured_media":96768,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,20919,19818,41938,1881,184,185,71104,71105],"class_list":{"0":"post-96767","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-hmrc","13":"tag-individuals","14":"tag-pension-fund","15":"tag-pensioners","16":"tag-personal-finance","17":"tag-personalfinance","18":"tag-royal-london","19":"tag-withdrawals"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/96767","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=96767"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/96767\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/96768"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=96767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=96767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=96767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}