View more on these topics

Budget 2007: Pension incentives rise for high-rate taxpayers

Budget tax changes have given advisers a strong case for advising higher-rate taxpaying clients to put more into a pension, says Hargreaves Lansdown head of pensions research Tom McPhail.

He says by maximising tax breaks on contributions and lowering tax paid when receiving a pension, higher-rate taxpayers will be better off.

He says higher-rate taxpayers will benefit from the tax rate threshold rise to £43,000 while still getting 40 per cent tax relief and can additionally take advantage of salary sacrifice to save on NI and income tax.

He says the majority of higher-rate taxpayers will become lower-rate taxpayers in retirement and so benefit from the rise in the lower rate of income tax from £7,280 to £9,770 and the lowering of basic rate of income tax to 20 per cent.

McPhail says: ‘These changes will make saving for a pension more attractive for higher-rate taxpayers. There is a positive message here. It looks as if Gordon has finally got it right.”

Bates Investment Services head of communications Paul Ilott says: “Many people will not realise the rate of income tax directly affects the amount of money they invest into their pensions because pension contributions attract tax relief. A reduction in income tax has the effect of reducing the level of gross pension contribution paid.”


Unfettered Fofs outperform cautious managed average

Research by T Bailey has found the average unfettered fund of funds outperformed the cautious managed sector average by 0.51 per cent over one year and 2.51 per cent over three years to February 28.Using data from Lipper Hindsight, it also found that the number of funds in the Investment Management Association’s cautious managed sector […]

BUDGET: 2 per cent cut in income tax

Chancellor Gordon Brown in a surprise announcement cut basic rate income tax from 22 per cent to 20 per cent from next year. Conservative leader David Cameron hit back at the Chancellor saying he has taken one tax down but “put 99 taxes up”.From April 2008 the basic rate income tax will be cut to […]

Small firms hit by tax rises

One-person-band advisers and their sole trader clients who are not self-employed have been warned to expect tax hikes following yesterday’s Budget.The Chancellor revealed that the small companies’ rate of corporation tax will increase from 19 per cent to 20 per cent in the next tax year, and rise to 22 per cent by 2009/10.With the […]

Benefits of using a probate bare trust

Have you ever wondered what happens to someone’s investment bond on their death if it is not written in trust? When someone dies it is essential to deal with their estate, which can be made up of their home, belongings, investment bonds and anything else they may have owned. But, it is not as simple […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm