You are here: Home - Retirement - Retirement planning - News -

Government ‘sneaked out’ figures on pensions’ tax

0
Written by:
02/05/2019
Britain’s pensioners are paying around £4bn a year more in income tax on their pensions that previously thought, according to new figures.

Steve Webb, Royal London director of policy, accused of ‘sneaking out’ figures on the cost of pension tax relief.
Figures for the 2017/18 tax year were published this week and showed pensioners paying £17.9 billion in income tax on their pensions in 2016/17 and £18.4 billion in 2017/18.

However, in the small print of the Table, it said that way tax was calculated for pensioners had been changed, specifically the figures are now based on ‘real time information’ supplied by pension schemes rather than a sample survey. This, more accurate, method, has added around £4 billion per year to the estimated amount of income tax being paid by pensioners.

Further analysis by Royal London shows that the overall cost of pension tax relief is more than £5 billion lower than previously thought. Webb said this undermines the Chancellor’s claims that the cost of tax relief is ‘eye-wateringly expensive’ and needs to be cut further.

Steve Webb, director of policy at Royal London said: ‘It is outrageous that the Government has sneaked out these massive revisions to the figures for the amount that pensioners pay in tax without any comment. It turns out that pensioners are paying more than £4 billion extra in tax on their pensions than the government previously admitted. It is clear that pensioners who have worked hard and saved hard are putting billions extra back into the economy through the tax on their pensions. The revised figures also show that the cost of tax relief on pension contributions is much lower than thought. The Chancellor must now revisit any thought of cutting help for pensions in the Budget later in the year.”

Pension income is taxable, except for the 25% lump sum. Income from Isas is not taxable, but savers do not get the same tax breaks on contributions as they do with a pension.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

Your rights for refunds if travel is affected by strikes

There have been a wave of strikes this year across many different industries, and more are planned over Christ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week