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Govt accused of ‘sneaking out’ pensions tax figures

db pension rights
Steve Webb

Former pensions minister Steve Webb has accused the government of “sneaking out” new figures that show pensioners are paying more income tax on their pensions than previously thought.

Earlier this week HM Revenue and Customs published annual figures showing pensioners paid £17.9bn in income tax on their pensions in 2016/17 and £18.4bn in 2017/18.

But Webb, who is now director of policy at Royal London, points out that HMRC has changed the way it measures the tax.

Instead of using a sample survey, the figures are now based on “real time information” supplied by pension schemes.

Webb adds what the explanation did not say is that though the method is more reliable method, it adds around £4bn per year to the estimated amount of income tax being paid by pensioners.

He says this was initially spotted by Centre of Policy Studies research fellow Michael Johnson, who pointed out the discrepancy when the figures for 2016/17 were last published in February 2018.

These reported pensioners had only paid £13.5bn – over £4bn less than is now estimated.

Webb says: “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 £4bn 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.”



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Three million missing out on workplace pension contributions

Steve Webb, Director of Policy and External Communications, Royal London  New analysis by mutual insurer Royal London has found that over three million people working for larger employers are failing to take up around £2bn a year which their employers have offered to contribute to their workplace pension schemes. In many workplaces, workers pay a […]


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 2nd May 2019 at 10:06 am

    Which, I suggest, confirms my view that the central exchequer could, were the government so minded, afford to issue enhanced yield gilts, available exclusively to annuity providers, as a mechanism by which rates could be raised, thereby increasing the amounts of spendable and taxable income flowing into the economy. Millions, perhaps tens of millions, of retirees would benefit.

  2. It’s a bit rich for Webb to criticize the government for being sneeky. When he was pensions minister what did he do to make life better for seniors? He messed up the state pension so that now the oldest receive less than those who are now on his ‘new system’ even though they have paid NI contributions for more years in order to qualify for a state pension and broke his promise to unfreeze the state pensions for those seniors unlucky enough to retire to a ‘wrong country’. Pot and kettles black spring to mind.

  3. Andy Robertson-Fox 3rd May 2019 at 6:35 am

    Must agree with Jane Davies that Webb is a fine one to talk. As she says his Pension Act messed up the system but also included as Section 20 the clause imposing the illogical and irrational freezing. He has also added that pensioners who have an adult dependent for who they are currenly eligible to claim will lose that allowance as of next April….a big loss for many whose spouse who has no eligibility in her own right… Yes this is the man who was once seen as the knight in shining armour for overseas pensioners and then reneged.

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