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Lower annual allowance is advisers’ choice over relief cut

The majority of advisers and clients would prefer to keep pension tax relief at the marginal rate and have a lower annual allowance than see the Government introduce a £40,000 annual allowance but cap relief at 40 per cent.

AJ Bell surveyed 300 advisers and 580 clients and found capping contributions at £35,000 with tax relief at the marginal rate and the penalty for exceeding the allowance set at 40 per cent was the most popular option.

More than 58 per cent of advisers prefer this to the Government’s plan, where the annual allowance charge would be set at varying rates depending on income. This is supported by 24 per cent of advisers while 17 per cent choose other alternatives and 1 per cent say the existing taper system should continue.

Fifty-five per cent of clients want the coalition to introduce the £35,000 allowance with marginal tax relief while 28 per cent say the Government should go ahead with its own plan, 14 per cent want another alternative and 3 per cent prefer the taper system.

Marketing director Billy MacKay says: “The Government proposal does not sit well with the majority of clients or advisers. While there are people who suggest that tax relief has its flaws as an incentive, a reduced annual allowance with tax relief at the marginal rate is by far the most popular choice.”


Dotas position

HMRC and the Treasury are aiming to bridge what they call an information gap with the IHT avoidance regime


Santander receives 1,300 complaints a day in first half of 2010

Santander has announced it received around 1,300 complaints a day in the six-month period to June 2010. The figure, which equates to around 245,000 complaints, is 7 per cent down on the same period in 2009. The bank says around seven out of 10 complaints were dealt with within 48 hours and only 2 per […]

DB transfers – one more factor to consider

Jim Grant – Senior Product Insight & Technical Support Analyst We look at how higher DB transfer values could cause a lifetime allowance issue and how that affects the advice process. Advisers are receiving an increasing number of requests from clients looking to transfer their pension from final salary schemes to personal pensions. This is a […]


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