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HMRC unsure of how many break pension allowance rule

29 July 2019
Issue: 4706 / Categories: News

A freedom of information response obtained by Royal London has revealed that HMRC does not know how many people it is penalising each year for breaching the rules relating to pension tax relief.

Since 2015 the money purchase annual allowance (MPAA) has applied to people who start to take chunks of taxable cash from a pension using the new pension freedoms legislation. The limit was originally £10 000 but was reduced to £4 000 in 2017. The rule does not apply to the tax-free lump sum or trivial small pot.

When asked by Royal London policy director Steve Webb how many people had triggered the charge since it came in HMRC said it did not know. Further it said it would be disproportionately expensive to find out because it would require more than three days of work to obtain the information.

The former pensions minister said it was ‘astonishing’ HMRC...

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