Jan 11 2007
HM Revenue and Customs (HMRC) has announced that it is to get in contact with approximately a million pensioners to remind them of recent changes to the taxation of their annuities.
It reports that income from annuities will be taxed through Pay As You Earn (PAYE) from April 6th 2007, which HMRC states will ensure the correct amount of tax is deducted if retirees provide up-to-date information.
Mike Shipp, director of PAYE at HMRC, said: "The change means that every pensioner need only pay the right amount of tax from April 2007 onwards and there will be no need to make repayment claims every year."
He added that, aside from circumstances of deliberate deception, pensioners will not be charged backdated tax if their circumstances have altered, though retirees will be able to claim back overpaid tax.
Last month, BDO Stoy Haward Investment Management commented that recent government reforms of alternatively secured pensions would result in the reintroduction of the upper limit of 75 years-old for the deferral of the purchase of an annuity.
