More than 10,000 counts of tax overpayment relating to pension freedoms have led to a £26.8m bill for HM Revenue & Customs (HMRC), latest data has revealed.
The tax office was forced to repay thousands of savers for overpaid income tax, with more than 10,000 repayment forms processed between April and June.
The P55 form to claim a repayment for tax overpaid when flexibly accessing a pension was processed 6,070 times, while the P53Z form for where a small pension was taken as a lump sum was processed 3,408 times.
Those who overpaid tax when they had stopped working and flexibly accessed their pension accounted for a further 1,098 processed P50Z forms.
The figures, which were revealed in HMRC's monthly pension schemes newsletter for July, result in an average repayment of around £2,500.
It came after HMRC revealed a record £1.9bn was flexibly withdrawn from pensions during the same period, suggesting another tranche of freedoms users may also fall foul to overpayment.
The significant overpayment is likely due to savers being given emergency tax codes when using the flexibilities for the first time, with the tax office then assuming the same amount will be withdrawn monthly.
Analysis by AJ Bell in April suggested a saver who withdraws £10,000 in one go will pay around £3,100 in tax when they should pay nothing at all, as HMRC assumes £120,000 will be withdrawn over the year.
At the time, the firm found that only 11,000 claims per quarter were made last year, despite 139,000 pots being accessed over the time, potentially meaning thousands of users may have failed to reclaim the overpaid tax.
Commenting on HMRC's latest figures, Royal London director of policy Sir Steve Webb said it was unfair that the burden to reclaim tax rests with savers.
"It is outrageous that in just three months HMRC has over-taxed people by more than £26m," he said. "It cannot be acceptable to take thousands of pounds per person in excess taxes and then expect people to have to claim that money back.
"The rules need to be changed so that only basic rate tax is deducted and any extra tax due is collected through the normal tax return process. This would be a far fairer system."
An HMRC spokesperson said: "Claimants presenting their 2017/18 P45 to their pension provider will pay the correct tax. In the event that they don't, any discrepancy will be settled within 30 days of HMRC being notified."
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