Pensioners face tax blow

Posted: 29th November 2011

The High Court will rule soon on whether pensioners who have taken early withdrawals from their pension funds will face tax charges of up to 70 per cent.

Tax form
The case has arisen because some pension scheme rules have been written to allow pensioners to take up to half their pension funds before the age of 55, by ‘lending’ money from their pension fund to a member of another pension fund who also ‘lends’ money from their fund.
HM Revenue and Customs are seeking to treat the loans as withdrawals from the funds and to charge the appropriate tax penalty for the withdrawal.
The case will provide even more ammunition for those calling for a general anti-avoidance rule to apply to tax law.