HMRC & UFPLS

Nick_Dr1

Hoenir said:

sgx2000 said:

dunstonh said:

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

Do you not agree.
There has to be a better way than taxing pensioners incorrectly, then having to refund it?

They are not being taxed incorrectly though. Various scenario's result in tax being refunded at a later date. What happens these days is that every micro issue is distilled into being a problem on social media. While there's little comprehension of the much larger macro picture as to why things are done the way they are. 

So you are saying "Its always been done this way and therefore must be the best way"?

You are right in that we get there in  the end, but that's only viewing it from the implementers viewpoint and ignoring the users needs.

AlanP_2

I must admit I don't see the problem with reclaiming any "overpaid" tax under the current system.

I've done it a couple of times and the whole end to end process has been easy and straightforwards.


1) Ask provider for £x - this turns up a couple of days later with their calculated tax deducted.

2) Fill in online HMRC form.

3) Refund turns up within a few weeks.


My guess would be that if there was an automated process to calculate correct tax at Step 1 it would take more than a couple of days for money to arrive in my bank account.

The provider would need to check with HMRC to find out what other income I have / or has been estimated for the year and then get a tax code adjustment from HMRC (as 0%, 20%, 40%, 45% rates and combinations of these may be applicable to that income source in that tax year). They would then process my payment request and I would get my money.

My estimate is the overall process from 1 -3 wouldn't be appreciably quicker.

Dazed_and_C0nfused

AlanP_2 said:

I must admit I don't see the problem with reclaiming any "overpaid" tax under the current system.

I've done it a couple of times and the whole end to end process has been easy and straightforwards.


1) Ask provider for £x - this turns up a couple of days later with their calculated tax deducted.

2) Fill in online HMRC form.

3) Refund turns up within a few weeks.


My guess would be that if there was an automated process to calculate correct tax at Step 1 it would take more than a couple of days for money to arrive in my bank account.

The provider would need to check with HMRC to find out what other income I have / or has been estimated for the year and then get a tax code adjustment from HMRC (as 0%, 20%, 40%, 45% rates and combinations of these may be applicable to that income source in that tax year). They would then process my payment request and I would get my money.

My estimate is the overall process from 1 -3 wouldn't be appreciably quicker.

As the saying goes, better the devil you know 😉

molerat

The system works for maybe 95%+ of those that have dealings with HMRC.  Changing it for the remaining small minority would likely cause more problems than it solves,  many would end up owing tax and not finding out until well after they have spent the funds it is due from.  Crystal balls and far from the truth statements from "customers" don't work well together.  Both myself and MrsM have made many pension lump sum withdrawals over the years and have never had to make a tax claim, it is all about understanding how the PAYE system works.