Chancellor to net £400m more than expected from pension freedoms

Published alongside the Budget yesterday, the Office for Budget Responsibility (OBR) revealed its fiscal outlook, which said the Treasury will net an extra £400m in tax as a result of people paying tax on their pension withdrawals.

Based on the Spring Budget 2017 costings, which factored in a tax take of £900m in 2018/19, the fiscal outlook from the OBR suggested a near 50 per cent increase in revenue raised from the policy this year to £1.3bn, taking the total tax generated by pension freedoms to £5.5bn.

Commenting, AJ Bell senior analyst Tom Selby said: “The whopping £13billion cut in the OBR’s borrowing forecast for this year wasn’t the only windfall to land in the Chancellor’s pocket yesterday.

“Buried in the OBR document is a revelation the Exchequer will net a cool £400million more than expected from the taxation of pension freedom payments in 2018/19.”

The OBR noted that the extra £400m in tax came due to “earlier cohorts drawing down their pensions for longer”, which Selby said could be explained by “buoyant stock markets” allowing savers to take income from their pensions for longer than expected.

“There is no doubt the policy has been hugely successful from the Treasury’s perspective, both in boosting the attractiveness of pensions and raising additional tax revenue,” Selby concluded.

    Share Story:

Recent Stories


Mortgage Insider Episode 5: Surviving Ups And Downs In The Industry
Barclays brings you the Mortgage Insider podcast to help make sense of this extraordinary time. Presenters Claire MacPhail and Tony Rimmer talk to industry figures about the fast-changing market

Exploring EARTH
Adam Cadle speaks to Edward Lees, Co-head of environmental strategies group, BNP Paribas Asset Management, about the investment opportunity for the coming decades: the environment.

FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.