Retirement annuities tax to be overhauled through PAYE

News Article - 15 January 2007
Category: Business

Britons currently receiving retirement annuities are to be contacted by HM Revenue and Customs (HMRC) over the next two months to remind them of changes to how their income is taxed.

Retirement annuities will be taxed through Pay As You Earn (PAYE) from April 6th to ensure that correct amounts are deducted from incomes, the government has stated.

Mike Shipp, HMRC's director of PAYE, 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."

Many retired workers have to claim tax back each year because they have not declared that they are not liable to be taxed. Companies paying the pensioners' retirement annuities deduct income tax at a rate of 22 per cent meaning that some retired workers will have been paying too much in tax.

Those Britons whose circumstances have changed and were liable to pay more in taxes than they did during recent years will not be asked to make up any shortfalls except in cases of deliberate misinformation, Mr Shipp added.

UK citizens who have not requested that HMRC calculate how much tax they owe should try to find an accountant to help them work out the sums themselves ahead of the January 31st deadline, the Scotsman recently advised.

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