The taxman has urged anyone considering accessing their pension pot to make sure they are not caught up in tax avoidance schemes, which can leave savers facing huge bills
Brits have been warned to “check before you dip” after HMRC said getting this wrong could cost far more than expected.
HMRC has urged anyone considering accessing their pension pot to make sure they are not caught up in tax avoidance schemes, which can leave savers facing huge bills – on top of any fees already paid to advisers. HMRC said: “Tax avoidance usually involves artificial transactions that serve no real purpose other than to falsely claim to reduce tax. If you have been in a scheme, you’ll have to pay the tax legally due, plus interest.”
The warning comes as HMRC launched a series of guides aimed at helping workers understand their pay, particularly if they operate through an umbrella company or agency. The advice covers everything from checking payslips to spotting untaxed payments like loans or capital advances.
Real-life cautionary tales
Chantelle, a nurse from Watford, noticed that some pay from a new agency job was landing in her account with no tax taken. She contacted HMRC and avoided a costly mistake.
Tanya, a single parent and nurse, wasn’t so lucky. Encouraged into a tax avoidance scheme, she ended up with a large, unexpected bill.
Duncan, an IT project manager, used an umbrella company without double-checking the details – and found himself trapped in a scheme.
HMRC said anyone worried they might be involved in a tax avoidance arrangement should contact them immediately. Ignoring the problem will only make the tax bill bigger, but support is available, including instalment arrangements for those who can’t pay in one go.
For contractors, checking your umbrella company is vital. HMRC provides tools to calculate correct pay and guides on what to look for to make sure the company is operating within the rules.
HMRC has also made it easy to report suspicious schemes anonymously, either online or by phone, to protect others from falling into the same trap. More information and guides can be found on HMRC’s website here.
