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Forestall rules will hit transfers with 20% tax

High-earning pension savers will lose their contribution history and could be hit with a 20 per cent tax charge if they transfer to another pension provider over the next two years.

Under the Budget’s draft anti-forestalling measures, annual contributions are capped at £20,000, although savers who have been making quarterly or more frequent contributions above that can continue. But if a client transfers a pension to a new provider the contribution history is lost and they will be taxed 20 per cent on contributions over £20,000, even if they have regularly saved more than this amount.

Talbot & Muir director Nathan Bridgeman says: “This is incredibly detrimental to clients and advisers. The client is not trying to beat the anti-forestalling measures, they are simply trying to transfer their pension into a simpler arrangement.

“It defeats the whole spirit of simplification. We hope the Government sees sense here.”

A spokesman at HMRC says: “Adding protection would increase complexity of compliance and administration within the context of legislation only intended to be in place for less than two years and which affects only a minority – those whose income is £150,000 or more and who wish to pay contributions of more than £20,000 a year.”


FTSE cautious at open

The FTSE opened higher at 4,238 today but lacked conviction from investors ahead of this afternoon’s meeting with members of the UK monetary policy committee who are due to testify on the inflation report.


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