HMRC warns people in 50s and 60s to 'delay retiring' until rule change

HMRC has warned some people to delay retirement due to lifetime allowance aboliton errors. HMRC, which is the government tax department, said that retirees "may need to wait until the regulations are in place before taking or transferring certain benefits".

The lifetime allowance for pension tax relief was due to be abolished on 6 April 2024 but some of the legislation needed to make this work properly has still not been completed. HMRC is encouraging people to put off retiring and drawing their pension if they can while everything is sorted out.

HMRC said: “Schemes should ensure that members are aware of the need for further legislative changes. As a result, members may need to wait until the regulations are in place before taking or transferring certain benefits. This is to ensure that their available allowances and tax position do not need to be revisited later in the year.”

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Alasdair Mayes, partner at LCP, commented on the move from HMRC: “Despite over a hundred pages of legislation, we still do not have final legal certainty on exactly how the abolition of the lifetime allowance will be implemented. There remain far too many unanswered questions, despite the fact that the LTA officially ceased to exist several weeks ago.

"We appreciate that HMRC is doing its best and is having to cope with a timetable driven by policy makers, but this whole experience shows why we need stability in pensions tax legislation." Mr Mayes went on, saying this week: "It is to be hoped that pensions tax does not become a political football.

"A worrying number of people in their late 50s and early 60s have already left the workforce and further changes to pension tax relief won’t just cause disruption to members and pension providers but also risk making the situation worse.”