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Level playing field on tax could resurrect IPA

Sandler is recommending a simplification to the tax regime to create a new level playing field between pensions, unit trusts and investment trusts which could see a resurrection of the Individual Pension Account.
According to Sandler, IPA rules should be changed to allow non-life companies to compete in the pensions market. The report says the current tax regime favours life companies and &#34exerts a number of unsatisfactory influences on the market”.
Despite being launched by the Treasury last year, only Virgin Money has embraced the IPA structure.
It claims the qualifying life policy regime creates &#34distortions and complexity&#34 and recommends its abolition for new business and recommends the abolition of the 5 per cent tax-deferred withdrawal rule.
The report also calls for the exemption of investment trusts from VAT on investment management to match unit trusts and Oeics and the scrapping of Stamp Duty Redemption Tax on ITs when held in an IPA.
AITC has welcomed the proposals which it says will allow ITs to compete with unit trusts and Oeics on equal terms.
Norwich Union Sales and marketing director Peter Hales says: &#34A totally level playing field would have to take into account the less favourable regulatory regime and the requirements for regulatory capital for life companies.&#34
AITC technical director Ian Sayers says: &#34You might see investment trusts convert to take advantage of the new tax structure. But to see a real benefit the structure of IPA should be changed so that they are stand alone.&#34

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