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Govt could lower pension tax relief limit, says MacIntyre Hudson

The Chancellor Alastair Darling will reduce the maximum pension contribution eligible for tax relief from £225,000 to £100,000, according to predictions from chartered accountants MacIntyre Hudson.

The firm says Darling may see the potential for higher earners to abuse the system and in turn limit the relief.

Tax principal Patrick King says: “Reducing the annual limit on pension contributions would raise tax from high earners currently using their maximum entitlements. The Chancellor can argue that nobody making contributions at that level is likely to end up on state benefits in retirement, and so a lower limit would protect the state’s interests while minimising opposition, at least from traditional labour voters.”

MacIntyre Hudson also believes Darling will raise the rate of National Insurance Contributions above the Upper Earnings Limit from 1 per cent to 2 per cent.

It says he may also introduce higher supplementary rates for top earners such as a 3 per cent charge on earnings above £100,000.

MacIntyre Hudson tax principal Nigel May says: “The chief attraction of this move is that it would only affect higher earners – those earning more than £670 a week – so would not ruffle the feathers of core Labour voters. Any move is likely to be deferred for a year, demonstrating the Chancellor has a strategy to tackle the budget deficit without further depressing the economy at this critical stage.”

May also adds that Darling’s proposals on tax changes for non-domiciles is an act of “economic folly”.

He says: “The government has recently clarified that the tax treatment of offshore trusts would not apply retrospectively to gains already accrued before the changes are introduced. Yet this will cause the administrative nightmare of a valuation of all assets at 5 April 2008.

“The Chancellor probably now realises that his hasty non-dom policy is a disaster in the making which will cost revenue rather than raise it but, fearing that this would be one climb down too many, is likely to plough on regardless.”


Regional PFS chairman joins Falcon

Personal Finance Society regional chairman Mandy Norman has joined Falcon Group as a registered individual.Norman, regional chair for Bristol and Cheltenham, will work from the group’s Clifton-based head office. She will continue to work with high net worth clients, business owners and employees of local companies. Norman says: “Having known the team at Falcon for […]

Eight MPC members voted for 0.25 per cent cut in February

Eight members of the Monetary Policy Committee voted in favour of this month’s 0.25 per cent cut, with one member voting for a 0.50 per cent cut in bank rate.MPC member David Blanchflower voted for bank rate to be cut by 0.50 per cent. He had previously been the only one to vote for a […]

Northern Rock to be nationalised

The Government is to introduce emergency legislation today to nationalise Northern Rock after abandoning plans to sell to a private buyer.

NDFA plans new income offering

NDFA is to launch a new income plan that will offer investors various payment options as well as 50 per cent downside protection.The NDFA fixed income or growth plan launches on February 21 and will offer investors either an 8.25 per cent fixed income annually, a monthly income of 0.66 per cent or a single […]

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Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


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