HMRC Statistics on Flexible Payments from Pensions

Official Statistics on flexible pension payments show a 21% increase in the amount withdrawn from pensions flexibly, increasing from £1.97 billion in Q3 2018 to £2.37 billion in Q3 2019. The number of individuals making withdrawals saw an increase of 27% over the year up to 327,000.  This was a slightly lower number than in the previous quarter but reflects the seasonal trend where more people withdraw funds at the start of the tax year.

The average withdrawal in Q3 2019 fell slightly to £7,250, down from £7,600 in Q3 2018.  The statistics have shown average withdrawal amounts consistently decreasing since reporting became mandatory in Q2 2016 with peaks in Q2 of every year, again in line with the start of the tax year. The decrease in average withdrawals suggests fewer people are paying unnecessary income tax on large withdrawals, however, advice is still essential to ensure money is taken in the most tax efficient way.

Even where careful planning is sought, due to the way withdrawals are made under the PAYE system too much tax is often deducted at source.  Where this occurs clients can make a reclaim during the tax year.

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