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Budget 12: Govt moves to close “aggressive” pension tax loophole

The Government will move to close an “aggressive” tax loophole which allows employers gain tax advantages by paying pension contributions into a registered pension scheme for an employee’s spouse or family member.

The schemes have been promoted by some firms as a way of sheltering income from tax and national insurance charges.

The Budget document says: “The Government will legislate to ensure that arrangements where an employer pays a pension contribution into a registered pension scheme for an employee’s spouse or family member as part of their employee’s flexible remuneration package cannot be used to obtain tax and NIC advantages for the employee or the employer.”

Standard Life head of pensions policy John Lawson says: “We always saw this as aggressive tax planning which is why we never promoted it.

“We support the Government’s decision to close this loophole.”

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