THOUSANDS of savers with big pension pots could be clobbered with massive tax bills unless they opt-out quickly after auto-enrolment, PwC said today.
Pensioners could lose fixed or enhanced protection on their savings, opening them up to thousands of pounds worth of tax liability, the accounting giant claimed, unless they make sure to opt out of auto-enrolment.
Individuals put protections on their account to ring-fence their savings from tax changes that subjected big pots – initially those bigger than £1.5m, and eventually those bigger than £1.8m – but these protections were conditional on those savers making no further contributions.
If anything extra is put into those pots through auto-enrolment, no matter how little, the savers in questions could face huge tax bills.
“We estimate up to 20,000 people could be at risk of enormous tax penalties,” warned Stephen Etherington, tax director at PwC. “Civil servants, hospital consultants, entrepreneurs and chief executives are the types of people who could be affected.”