View more on these topics

CAR could trigger pension penalty

Skandia is warning that applying customer-agreed remuneration to pensions could result in an unauthorised payment and has called for clarification from the Revenue and the FSA.

The company says any fees for advice that are deducted from a pension contract must not result in any tax consequences for the policyholder.

It says an unintended consequence of CAR could mean that charges paid from the client’s pension fund could be classed as an unauthorised payment which would attract a tax penalty.

Skandia says the new rules must be drafted so that any payment from a pension contract to a third party in lieu of services rendered in delivering financial advice should not create an unauthorised payment.

The provider also says the FSA must ensure that CAR is VAT-exempt, regardless of whether the adviser is paid via a straight fee, a fee deduction or commission from the product.

Skandia strategy director Michelle Cracknell says it is important that CAR is introduced and applied in a simple way without confusion and inconsistency.

She says: “There should be encouragement for those seeking advice and saving for their retirement. Hence, it should be possible to pay for advice from a pension contract without attracting any tax penalties.”

Hargreaves Lansdown head of pension research Tom McPhail says he believes the Government will ensure that CAR payments will not be classed as unauthorised payments.

McPhail says: “The Treasury is fairly relaxed about commission, so I suspect it will be fairly relaxed about CAR. I do think there should be consistency in regard to VAT under CAR, irrespective of how the adviser is paid.”

Recommended

Ricky Okey

In every financial market, there are some companies that fare better than others. Abbey for Intermediaries managing director Ricky Okey is upbeat about the business’s prospects despite the mortgage market facing its biggest crisis since the early 1990s crash. “We are lending and we have an appetite to lend,” says Okey.

US loan growth is not painting a pretty picture for the US economy

Written by Mike Riddell One of the current big debates in global financial markets is whether investors should believe ‘hard’ rather than ‘soft’ data, where the usually reliable business and consumer surveys have been suggesting strengthening in global growth momentum for some time now, while the economic data that feeds through into the Gross Domestic […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com