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HMRC has issued a warning for UK households who are dipping into their pension pots. HMRC tax rules specify the conditions that need to be met for payments to be authorised. Any payment that does not meet these conditions is an unauthorised payment. Taking to X, the DWP said: "Thinking of dipping into your private pension pot early? It could be tax avoidance and could cost you a lot more than you think. "Don't get caught out." Common examples of situations where payments are classed as unauthorised include "trivial lump sums in excess of £30,000", HMRC said. READ MORE Older drivers face new roadside test in England and could have licence revoked Other examples could be continued payments of pension after the member’s death - or when a scheme realises it incorrectly calculated the amount of the member’s pension pot following a transfer of funds or purchase of an annuity and the balancing payment is made directly to the member. Other examples could most lump sum payments to cash-in or access pension funds before age 55 except when the member retires due to ill health OR if before 6 April 2006 the member had the right under the pension scheme to take their pension before age 55. Certain movements of pension funds within a pension scheme are also classed as unauthorised payments. The Labour Party taxman said: "Where the unauthorised payment is made to or for a member it’s the member who’s responsible for paying the tax charge – even if they did not receive the payment. "If the payment is made after the member’s death the person who receives the payment is responsible for paying the tax. "Where the payment is made to or for an employer participating in an occupational pension scheme it’s the employer who’s subject to the unauthorised payments tax charge. "The rate of the unauthorised payments charge is 40 per cent."
