Financial Advice UK - Pensions News - Pension U-Turn Is Broadly Welcomed

While the Bank of England has faced the dilemma of how much funding assistance to give to the UK markets without allowing backs to benefit directly, this situation is now being replicated in Europe...
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Pensions News - Last Updated Monday 2nd June 2008

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Pension U-Turn Is Broadly Welcomed

Monday 2nd June 2008

As we covered some days ago, the UK Treasury had been looking to back date a new and controversial tax on small pensions in the UK. The move is set to hit over 420,000 people who have retired, many of whom had not expected to pay any tax on their small pension payments. Initially the move was to be back dated to 2007/8 but it will now start in the current tax year, 2008/09.

However, while the move has been broadly welcomed by the likes of Age Concern and other charities for the older generation, the fact that those involved will not be informed until 2009 has dismayed some. Those involved in the changes will be expected to pay their first tax payments in 2010/11 as well as back taxes in the same year – resulting in what will be an intolerable strain for many.

Many observers believe that the authorities should have written off the expected tax windfalls for 2007/08 and 2008/09 but these calls have been ignored. How apt that at a time when the older generation need their pensions and additional incomes more than ever, the Treasury has decided to bring them into the tax system.