Hundreds and hundreds of pensioners have paid extra in tax than they really owe. HMRC has processed round 15,800 tax refund claims for individuals who accessed their pensions early, new figures from HMRC have proven.

Since the brand new reforms have been launched in 2015, individuals who have flexibly withdrawn their pension savings have collectively overpaid greater than £1billion.

This had led to a whole lot of hundreds of pensioners overpaying their tax by £3,000, new information reveals.

Steve Webb, a former pensions minister and now a associate at consultants LCP has slammed this error as “an absolute disgrace”.

The overpayment is because of the issuing of emergency tax codes.

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Instead of a traditional tax, some pensioners have been given the emergency tax price by HMRC as if people pull out the quantity from their pot each month.

The emergency tax code means hundreds have paid hundreds of kilos extra in tax than they really owe, which they then want to say again.

For instance, if somebody pulls out £10,000 from their pension pot one month, HMRC taxes them as if they are going to be taking out £120,000 that 12 months.

Mr Webb mentioned: “This is an absolute disgrace. A system based on systematic over-taxing of pension savers cannot be right.

“There is no good reason why citizens who access their pension should have to go through the hassle of claiming back excess taxation which they should never have had to pay in the first place.”

The modifications to the pension system in 2015 meant individuals have been in a position to withdraw a few of their outlined contribution pension financial savings as an revenue from age 55 whereas leaving the remainder of their cash invested.

As a outcome, some individuals are charged at an emergency tax price paying hundreds of kilos extra in tax than they owe.

The newest figures present that between January and March this 12 months, HMRC processed 15,800 tax refund claims to individuals who accessed their pensions early.

The quantity refunded by HMRC totalled £48.5million over the identical three-month interval.

How to reclaim overpaid tax from HMRC

Britons should full one in all three return varieties from HMRC.

People both must make a declare themselves or await HMRC to evaluate the self-assessment funds after which situation a refund.

Any cash owed must be returned inside 30 days. For extra data on which of the three individuals can fill out, they'll discover it on their web site.

An annual tax invoice might be recorded on the finish of the 12 months by the tax authority as a part of its customary reconciliation train.

Mr Webb added: "Reform of the system is lengthy overdue in order that it really works to the advantage of pension savers and never the Treasury.”

An HMRC spokesperson mentioned: "Nobody overpays tax on account of making the most of pension flexibility.

"We will automatically repay anyone who pays too much because they’re on an emergency tax code.

“Individuals can claim back any overpayment earlier if they wish."