Pensioners are celebrating a victory as HMRC is set to eliminate a costly tax issue that left millions of them £3,900 out of pocket.
The trouble stemmed from emergency tax codes applied to state pensions by the Department for Work and Pensions (DWP). This was implemented as part of the pension reforms in 2015, giving some pensioners an emergency tax code.
It saw HMRC dedicating an extra tax from additional sums taken from a person’s pension fund based on the assumption that this withdrawal would be ‘month one’ in a series of payments over the rest of the tax year.
Pensioners would then have to claim back the overpaid tax themselves. HMRC have now announced that, as of April, these emergency tax codes will be replaced with regular tax codes.