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Small Pensions Set To Be Hit By Tax Grab

While it may not have received the same press coverage as the abolishment of the 10p tax band, the government has quietly announced plans to tax an additional 420,000 pensions from next year after allowing pensions of less than £1,000 a year to be paid free of tax since 1983.

There are literally hundreds of thousands of pensioners who are unaware that they will see their tax charges increase by up to £200 next year, many of whom will not be in a position to cover the short fall. There is even talk that the authorities, who first looked again at the situation of tax free pensions in 2000, will pursue two years of back taxes from these additional 420,000 pensioners.

It is quite staggering that in an age when we are all being encouraged to open our own personal pensions, the authorities hit us with tax charges at a later date. The move has provoked uproar with charities such as Help The Aged who have long claimed that the pensioners of the UK are neglected by the government and very often seen as an easy target.

It seems highly unlikely that those being pulled into the new tax band will take the move lying down, but quite what they will do remains to be seen.

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