View more on these topics

Axing 40% tax relief would be too complex

Bullivant says misunderstanding over degree status ‘is unhelpful as we look to increase professionalism in sector’

The Government has highlighted the potential difficulties of removing higher-rate tax relief on pensions, helping to calm industry fears that it plans to abolish the relief.

Reacting to the work and pensions select committee’s recommendation that it should respond to the Pensions Commission’s criticism of higher-rate tax relief, the Government said removing it would be very complicated.

It said pension contributions get tax relief at a person’s marginal tax rate and pensions in payment are taxed at mar- ginal rates. Managing the transition to any new system would need to distinguish between those who previously had relief at 40 per cent and those who had not.

The Government also said abolishing 40 per cent tax relief would be complex for employers to administer as they would need to restrict tax relief on individual contributions but also charge tax at the marginal rate on the value of employer contributions.

Aegon head of pensions development Rachel Vahey says: “We welcome this apparent reprieve. Higher-rate taxpayers are usually the drivers behind workplace pension provision arrangements being set up and removing this self-interest would probably have a knock-on effect on their commitment to provide pensions for their workforce.”

Scottish Life head of pensions strategy Steve Bee says: “If higher-rate tax relief is removed, this will destroy the pension market. But we are so used to crazy legislation in pensions that nobody would be surprised if this happened.”

Recommended

Liv Vic announces review of banking operations

Liverpool Victoria has announced a strategic review of its banking operations with Fenchurch Advisory Partners appointed to assist in the review.The review will consider a full range of options for LVBS including performance enhancement measures, strategic partnerships, joint ventures and an outright sale of the business.Liv Vic group chief executive Mike Rogers says: “We remain […]

Isas are here to stay

Balls says distinction between maxi and mini will be removed and hints that the investment limit may be raised

Field slams HBOS on Farepak collapse

Labour MP Frank Field has laid down an early-day motion attacking HBOS for its “pivotal” role in the collapse of Christmas savings firm Farepak. He says HBOS allowed Farepak to continue trading while it clawed back around £1m a week of people’s savings to offset the company’s overdraft with the bank.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment