Watch out for pensions in tax crackdown

23 September 2010

The Liberal Democrats’ £7bn crackdown on tax avoidance and evasion may hit some mainstream pensions and investment plans, according to Cicero Consulting.

Treasury Chief Secretary Danny Alexander set out the “ruthless” crackdown in a speech at the party’s annual conference in Liverpool last Sunday. He said the £900m spent on the crackdown would lead to an extra £7bn a year being collected in tax by the end of 2014/15.

It would target people hiding money in offshore tax havens, root out 50p rate tax dodgers and bring about a fivefold increase in prosecutions.

Last week, it emerged that the UK’s tax gap through evasion, avoidance and collection problems rose by £4bn in 2008/ 09 to £42bn. Alexander said: “We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra.”

Cicero Consulting director Iain Anderson says advisers should look closely at the measure. He warns: “We might just see the usual unintended consequences of such a move hitting some mainstream pensions and investment plans. While the headlines may say one thing, watch out for the detail. Middle Britain might just get caught in the net.”

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