HM Revenue & Customs has returned more than £45mn in overpaid tax to savers who accessed their pensions during the last quarter of 2022.

The tax authority said that between October and December, it had processed 14,335 pension flexibility claims forms and repaid £45.03m to people who had been charged emergency tax when they withdrew money from their pension pot.

According to Canada Life, since pension freedoms were introduced in April 2015, £970mn has now been re-paid to customers by HMRC.

Andrew Tully, technical director at Canada Life, said: “Almost eight years on from the introduction of the pension freedoms there must be a better way to administer the tax position around pension withdrawals which would mean HMRC is not processing refunds of over £40mn in just a three month period, and close to £1bn since 2015.”

Under the pension freedom rules people aged 55 plus can freely access their cash. But any withdrawals above the 25 per cent tax free amount are taxable at an individual’s marginal rate of income tax.

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