Beat the grasping taxman

FIVE-MINUTE GUIDE TΟ... PENSIONS OVER-TAXATION

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HMRC is still forcing pensioners to pay tax they don't owe when accessing their retirement savings, more than a decade after pension freedoms were introduced.

Since 2015, when pension freedoms allowed people over 55 to flexibly withdraw funds, any money taken is added to total income for the year and taxed if it exceeds the personal allowance. This has led to a flawed system that routinely overtaxes retirees, often by thousands of pounds, who must then claim it back.

Figures published last week show the problem persists. Between October and December 2025, £46million was reclaimed by pension savers who had been overtaxed. A total of 13,652 reclaim forms were processed, with an average refund of £3,388.

Since 2015, more than £1.5billion has been returned to people overtaxed on pension withdrawals, and that's a fraction of the true scale of the problem.