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Osborne set for pension freedoms tax windfall

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The Treasury will gain more than double its original forecast in boosted tax revenue from the pension freedom reforms, according to figures from Hargreaves Lansdown.

The Government originally estimated the freedoms would generate a £320m gain in its tax take in 2015/16, but Hargreaves says the true figure could be near £700m.

Hargreaves Lansdown head of pensions research Tom McPhail says: “It looks as if the Chancellor could be in for a handy windfall, thanks to his pension reforms.

“It is important to bear in mind though that this will simply bring forward tax revenues and consumer spending which would otherwise have been paid out over the years and decades to come.

“It also underlines the importance of maintaining a stable pension system which continues to encourage and reward responsible long-term savings habits.”

In addition, the firm says it will be difficult to ascertain the true scale of the tax take in the early months of pensions freedom. This is because many savers will be taxed under an emergency code, and therefore overpay, while others seeking to cash in may be thwarted by their provider’s inability to comply with payment requests.

The sums contrast with figures from consultancy Hymans Robertson, which has estimated even bigger gains for the Government at an estimated total of £1.2bn for 2015/16.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Lindsay Lockett 7th July 2015 at 11:26 am

    Ok, so if this is true and the tax take is higher, does this mean it will contribute double towards Pensionwise afloat ? Because surely twice as many people must therefore have used this valuable service to generate the extra tax revenue for HMRC.

  2. HMRC have had a field day! Not one of the pension cases we have dealt with have been taxed in the way that we were originally led to believe they were going to be taxed – even with a P45 or provider held tax coding. All have been over taxed (using the HMRC calculator) and the clients now have to apply to HMRC for their refunds. Guess what…….they can wait anything up to 12 months for a refund!!!

  3. This is a surprise? This is exactly what was intended.

    The 2 main reasons for these ‘freedoms’ were the increased tax and the encouragement to the public sector to opt for money purchase rather than final salary so that they could take the opportunity to trash the cash like all the other numpties and let the Government off the hook for the unfunded future liabilities.

    If you shake hands with Osborne – count your fingers.

  4. Quite so Harry

    This is basically just stealing from future revenue streams and creating massive problems at the same time.

    Is this the way to fun a country?

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