Phoenix pays £3m over lifetime allowance mistake

Phoenix pays £3m over lifetime allowance mistake

Phoenix has warned of a possible multi-million pound payout to HM Revenue & Customs after the company failed to alert some of its clients about changes to their lifetime allowance usage.

The company's results, published today (March 8), revealed it has set aside £3m to cover tax penalties to HMRC.

Phoenix said: "The customer remediation for operational tax provision relates to tax penalties payable to HMRC following failure to notify certain customers of changes to their lifetime allowance usage.

"The group is currently in discussion with HMRC in respect of these items and the provision represents the group's best estimate of the likely future costs."

Whenever savers start taking money from their pensions, schemes have to send them a statement telling them how much of their lifetime allowance they are using.

The lifetime allowance is currently £1,073,100 and has increased with inflation in recent years, but last week's Budget froze this until 2026.

Phoenix saw its operating profit jump to £1.2bn last year, up from £810m in 2019, which it partly put down to its acquisition of the ReAssure businesses.

It was first announced in December 2019 that Phoenix would buy ReAssure Group, a life insurance closed book consolidator, from Swiss Re making it Europe’s largest life and pensions consolidator.