Pension Drawdown Transfers
Published / Last Updated on 10/06/2010
by Ashley Clark, Director
Following further legal advice HMRC has confirmered that income drawdown investors moving to another drawdown provider or annuitising before their 55th birthday will not incur a 55 per cent unrecognised transfer charge on their entire fund.
However, income taken through a new drawdown provider before the individual’s 55th birthday would be classified as an unauthorised payment and be hit with a 55 per cent charge.
We suggest that this is a good and sensible step by HMRC to back away from an embarrasing position, however, again it ‘shoots itself’ in the foot by suggesting that new payments from a new ‘drawdown provider’ would incurr a tax penalty.
Where is the sense in this? What if the drawdown provider went into liquidation and the policyholder was forced to transfer? They probably would not levy a charge then, so why when it is a voluntary transfer.
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