LONDON (Citywire) - The government is clamping down on pensions that have not been deducting pay as you earn tax.
While most pension providers already deduct PAYE, others are still being paid tax-free under old arrangements agreed between pension providers and HM Revenue and Customs.
But from April 2008 onwards these schemes will be taxed under PAYE and any underpayment of tax for 2007/08 will be collected in monthly instalments during 2008/09.
HMRC said that it would only chase outstanding tax before this period if product providers disclose pension details for 2006/07 or if someone has deliberately tried to avoid paying tax.
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