Pension fund members face 70% tax charge

PEOPLE who draw their pensions early might be liable to pay a tax charge of up to 70% following a case to be heard in the High Court this week.

The court will rule on whether schemes that allow individuals to draw up to half their pension out before the age of 55 are in breach of regulations, The Times reports.

The case, to be heard this week, involves a scheme in which members in two pension funds are encouraged to lend the money to one another. This means they are not directly drawing money from their own pension fund.

HM Revenue & Customs regulations state that early access to pensions is not allowed and could be subject to a tax penalty of up to 70%.

Related reading