HM Revenue and Customs (HMRC) has warned workers accessing private pension savings or using complex pay arrangements to “check before you dip” amid a crackdown on tax avoidance schemes.
The tax authority said it is targeting arrangements that promise higher take-home pay but could leave individuals facing significant financial consequences.
Officials warned that those involved in such schemes may be required to repay the full amount of unpaid tax, alongside interest charges and penalties.
HMRC said concerns are growing over contractors and agency workers being drawn into complicated payment structures, often operated through umbrella companies, which can obscure how income is taxed.
The organisation cautioned that offers of early or tax-efficient access to pension funds should be treated with suspicion.
HMRC said: "If something sounds too good to be true, it probably is."
The authority explained that many avoidance schemes rely on “artificial transactions that serve no real purpose” beyond reducing tax liabilities on paper.
However, it warned the consequences can be severe for those involved.
HMRC warns workers over pension access and umbrella company tax schemes
| GETTYHMRC also said individuals remain legally responsible for paying all tax owed, regardless of whether they relied on advice from scheme promoters.
Workers may face a “double hit”, losing money paid to scheme operators before being pursued for the full tax bill.
One warning sign identified by HMRC is receiving more money in a bank account than is shown on a payslip.
Other indicators include payments described as loans or capital advances, unusually complex pay arrangements, and umbrella company schemes offering higher-than-expected take-home pay.
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Are you affected by state pension age changes? | GETTYHMRC highlighted several cases where workers encountered unexpected tax demands after becoming involved in such arrangements.
One nurse received untaxed payments into her account before later facing a tax bill.
In a separate case, a single parent joined a scheme and was subsequently issued with an unanticipated demand.
HMRC said the individuals were still required to repay the full amount of tax owed.
The authority said relying on third parties to manage tax affairs does not remove legal responsibility.
HMRC is urging anyone who believes they may be involved in a questionable scheme to contact the organisation as soon as possible.
"The longer you leave it, the bigger the tax bill," the tax authority warned.
Support is available for those struggling to repay what they owe, including options to spread payments through instalment plans.
With umbrella companies widely used across the contracting sector, HMRC said it is essential that workers understand how their income is structured and taxed.
The authority added that suspected schemes can be reported, including anonymously, as part of efforts to tackle promoters behind the arrangements.