The Financial Times quoted experts who said people withdrawing cash from their pension funds could expect to pay high tax rates.
HMRC will assume that the first withdrawal is the start of a monthly withdrawal programme and tax it accordingly, which means many people will pay higher rates of income tax on their withdrawals. Supplying a correct tax code won’t prevent this. Experts say HMRC is determined not to under-collect tax and will expect people to reclaim any overpayments of tax at the end of the year.
These tax rates will not apply to withdrawals of the proportion of the fund (normally 25%) that can be taken as tax-free cash.