Chancellor Alistair Darling refused to budge despite heavy lobbying from the Association of British Insurers to change the tax regime for insurance bonds in response to the capital gains reforms.
Most of the life offices played down the impact this would have on the insurance bond market saying that they would still be an attractive investment for basic rate taxpayers and in some circumstances higher rate taxpayers.
The ABI expressed disappointment at Darling’s decision while Aifa director general Chris Cummings urged advisers to be wary of transferring clients out of bonds and into collectives.
But others were upbeat about the opportunities this will offer to advisers with Skandia head of tax and financial planning Colin Jelley saying it is great news for advisers.
Informed Choice managing director Nick Bamford says: “Complexity is always good for advisers. The skill of the adviser becomes quite valuable in selecting the right type of investment.”
On the pensions front, the changes were slight and quite technical – although one new measure allowing small pension pots to be trivially commuted in addition to the existing £16,000 allowance sparked some interest.
Aegon Scottish Equitable head of pensions development Rachel Vahey says it is a welcome development but says it should apply to all types of pension scheme.
She says: “It should not have only been brought in for occupational pensions and should have included personal pensions as well. It is completely illogical and creates an unlevel playing field.”
Scottish Widows head of pensions market development Ian Naismith is also urging the Government to extend the facility to personal pensions.
There was some good news for investors looking to emigrate with legislation being brought in to allow overseas pensions exemption from inheritance tax.
Currently, pension transfers to qualifying recognised overseas pensions schemes are added to an investor’s UK estate when calculating inheritance tax whereas in the UK, pensions are exempt from IHT.
The provisions in the Finance Bill 2008 will now give IHT exemption to pensions transferred overseas which is good news for investors moving abroad.
Aside from Budget news, Standard Life delivered strong profit growth of £881m – a rise of 43 per cent in 2007 compared with £614m in 2006.
And Aviva policyholder advocate Clare Spottiswoode presented her response to Norwich Union’s offer to with-profits policyholders for the reattribution of its £5bn inherited estate.
Details of the offer and Spottiswoode’s response have not been disclosed to the public but an information brochure is in the process of being prepared and will be sent out to policyholders shortly.