HMRC has been slammed with complaints following last-minute alterations to its new pension tax system, which has replaced the Lifetime Allowance with a lower limit on lump sum payments. The tax authority advised some clients last week to postpone taking their pension benefits or transferring them until it can rectify incorrect legislation related to the abolition of the lifetime allowance.
Andrew Tully, technical services director at Nucleus Financial, criticised the move in an interview with industry publication Pension Expert: “To suggest at such a late stage that people should delay taking benefits or transferring shows how poorly these changes have been implemented.Mr Tully continued: “.
He added: “We are only a few days away from implementation so some advisers and customers will have made plans and committed to use funds. Now HMRC is effectively delaying payments to customers or stopping them taking certain actions while it fixes incorrect legislation. It’s a bit of a shambles.”
However, a government spokesperson defended the move, stating: “For the vast majority of schemes and their members, all the legislation necessary to implement the LTA abolition was published in Finance Act 2024. Feedback from industry has highlighted a few areas where further technical changes are required.”
A statement by HMRC read: “HMRC is committed to working closely with industry to support schemes and members where they would benefit from waiting for these changes.”, reports Birmingham Live.
It conveyed further: “We will confirm timings as soon as possible, however it will not be before April 6, 2024. The regulations will be retrospective to this date.”
The statement continued: “Given this, HMRC is also aware that industry will require guidance on how to operate affected areas during the interim period. Guidance will be provided as soon as possible.”
All this comes in light of the hurried legislative push to abolish the lifetime allowance.
From the industry’s perspective, leaders have voiced concerns around the insufficient time allocated to efficiently deliver a change of such enormous scale.
