Plans to back-date taxes on small personal pensions have been reversed, thanks to a campaign from charities.
Older Britons will not now be obliged to pay tax on small private pensions, following an apparent government u-turn.
HM Revenue & Customs (HMRC), the UK's tax collectors, had planned to collect back-taxes on personal plans worth less than £1,500 per year for the 2007/08 financial period onwards. This could have seen some of the small pension holders, many of whom are on low incomes, paying up to £300 extra in taxes.
The body had justified its proposal by saying that limitations of technology prevented the levy being administered in 1983, because the small size of these private pensions made it too complicated for its computers to work out the tax at the time. However, a coalition of lobbyists including charities Citizens Advice and Help the Aged branded the retrospective taxing "unfair".
However, HMRC now says that it will drop the back-dated payments, and will begin charging only from the current financial year onwards. A spokesman commented: "To correct a long-standing anomaly small pensions, which have not previously been taxed will, in the interests of fairness to all taxpayers, have their tax treatment brought into line with that of other pensions.
"We will be working closely with pensioners' representative bodies to ensure that these changes are well understood and communicated in advance to the pensioners concerned."
