View more on these topics

Providers: Scottish independence could end pension tax relief for millions


Over a million savers paying into pensions run by Scottish insurers could be unable to claim tax-relief if Scotland votes in favour of independence next year, a senior industry figure has warned.

Insurers have privately agreed not to publicly discuss the implications of a “yes” vote due to concerns about the uncertainty this could create, but one provider told Money Marketing that because an independent Scotland would not automatically gain EU membership, the future of tax-relief on pension contributions could be thrown into question.

The source says: “At the moment, if you are in Europe, you get tax-relief if you contribute to a pension in another country. That is enshrined in European law.

“The problem for Scotland is the European Union has already said it will not automatically gain EU membership.

“So on day one of independence you would have a country outside the European Union which is not covered by the EU doctrine on tax-relief, which means the approximately 1.8m English customers paying into a Scottish company would not get tax relief and the 200,000 Scottish customers paying into an English company would not get tax relief.

“Independence is an unholy mess and it would be a disaster for Scottish financial services, which is why nobody wants to speak about it.”

There is also concern among insurers about the impact a “yes” vote would have on the Scottish financial services market in general.

One source says: “Who wants to serve a market with 2.5 million adults in it compared with a market with 50 million adults in it?

“You would end up with very few providers in the Scottish market.”

Forty Two Wealth Management partner Alan Dick says: “Independence could be a disaster for Scottish financial services.”



Do investors have too much in UK equity income?

UK equity income is a persistently popular sector with investors and regarded as a cornerstone of a well-constructed portfolio. However, moves by some of the sector’s funds to look beyond the UK for opportunities have prompted some to question if investors are too exposed to UK equity income. Investment Management Association figures rank the equity […]

CML: Mortgage market experiences strongest April since 2008

The mortgage market experienced its strongest April since 2008, according to figures released today by the Council of Mortgage Lenders. In April, lenders advanced an estimated £12.1bn to borrowers, up 4.3 per cent on the £11.6bn advanced the month before. April’s figure was also up 22.2 per cent on the £9.9bn advanced to borrowers in […]


John Malone: Don’t sleep walk into MMR oblivion

The countdown to the mortgage market review is well and truly underway, with less than 12 months to implementation in April 2014. Behind the scenes lenders are frantically changing their systems, training staff and, for some, making major decisions as to how they will operate next year.  Meanwhile, many intermediaries appear to be sitting back […]

Tony Wickenden: GAAR guidance gives some certainty

Last week I started to look at the new Guidance Notes on the general anti-abuse rule and, in particular, the examples given to illustrate how the GAAR is likely to be applied in relation to the taxes within the scope of its coverage. The examples in Section D of the guidance are very helpful and […]


News and expert analysis straight to your inbox

Sign up


There are 15 comments at the moment, we would love to hear your opinion too.

  1. “One source says: “Who wants to serve a market with 2.5 million adults in it compared with a market with 50 million adults in it?”

    Ah, that explains why Monaco and Liechtenstein have no financial services and operate a barter economy.

  2. So, companies quoted on the UK stock exchange will suddenly be removed will they?

    More bull from the powers that be.

  3. ‘One source says: “Who wants to serve a market with 2.5 million adults in it compared with a market with 50 million adults in it?”

    ‘Ah, that explains why Monaco and Liechtenstein have no financial services and operate a barter economy.’

    Yes – maybe Monaco and Liechtenstein should think about operating a hugely successful financial services based economy for the millions of people OUTSIDE these countries.

    No…wait.. I forgot – they already do.

    Think will happen in Glasgoooo?

  4. Indeed. A customer base of 2.5m roughly equates to the Republi of Ireland’s financial services sector. The auguries are not good…

  5. The source obviously hasn’t got as far as using google. Iceland, Leichtenstein and Norway – none of which are EU members – have arrangements in place with the UK to allow transfers between each other without triggering unauthorised payment charges so worst case scenario, benefits could be transferred. Income already being received – again, UK has arrangements in place to avoid double taxation with many economies e.g. Australia. Is it beyond the wit of man to make such necessary arrangements?

    The other source needs to be told that it’s not the 1920s and financial services companies tend to be cross-border, if not global these days. Of the four large Scottish insurers, only one is not owned or merged with a non-Scottish company.

    There are many arguments for and against independence. I’m not seeing any in this piece. Slow news day.

  6. This is absolute nonsense and scare mongering. Regardless of political views this nonsense has to be challenged.

  7. I am vehemtly anti-independence but this sort of drivel harms both pension providers and customers alike.

    It’s another reason for people to not save for retirement. Perhaps Money Marketing would like to give a more balanced view on things rather than just quoting anonymous sources!

  8. @James – I am of course aware that there are huge differences between Monaco and Scotland – in particular the relative wealth – all I wanted to do was illustrate that the argument as presented (small market = little demand = no supply) is absolute nonsense.

    Having a small population is not a problem in and of itself, if you have a productive economy… and I will leave it there.

  9. The problem with the Scottish independence debate (and it’ll be the same for the UK/EU debate) is that so much is conducted at one level (quite often descending into the yah/boo school playground argument).

    But like so much in life, the devil is in the detail, and there’s quite a lot of detail in the paper recently issued by HMG. Whilst it may all be surmountable (or may not perhaps) it’s not sensible to simply dismiss the issues raised without serious consideration.

    I suspect much will come down in the end to a blind leap of faith in the end. Rather like the UK/EU trade debate – will the EU impose tarrifs if we leave and don’t meekly submit to EU diktats as Norway has to – or would be the start an Icelandic style “trade war”. Who knows?

  10. @Sascha

    Small market=little demand=little supply is not nonsense. It is basic economic reasoning.

    There are of course exceptions to every rule e.g. Monaco et al.

    Anyway – you sort of answered it yourself when you referred to the need for a productive economy.

    Scotland isn’t.

  11. I have money in Scotland and would definately move it back to England if independence went ahead.

    I wouldn’t want my money in a foreign country.

  12. I’m sure if it was an issue they would re-locate their HO to England if required.

    Another poser is whether other investments would then be classed as offshore investments?

  13. The UK life industry has for decades included companies with Canadian, Australian and South African parentage. They have all ben able to offer pensions with tax relief for UK customers. Why would it be any different for companies with Scottish parentage? As other commentators have said, this is simply scare-mongering drivel.

  14. As a pension saver with funds in both Standard Life and Scottish Widows pensions I have concerns about the big “What If?” questions.

    What if Scotland goes independent and adopts the Euro? Will my investments be denominated in Sterling or Euros? If the latter, should I repatriate my pension to avoid currency risks? What would be the correct financial advice to a customer in England with a Euro denominated pension?

    If Scotland goes independent and is temporarily outside the EU, what are the implications for me? what financial protections do I have?

    If Scotland goes independent and adopts the Euro and sees massive outflows of investment, will the Scottish government be able to introduce currency controls to prevent this? If so, how does that affect my investments?

    Yes there is lots of playground name-calling in this debate, and lots of mud being thrown by the UK government. But anyone who looks at the financial implications of splitting a country, as happened when Czechoslovakia turned into the Czech Republic and Slovakia, should be concerned about how customers are likely to behave.

    I wrote to both my pension providers and asked what planning they were doing. Scottish Widows told me in detail, Standard Life told me not to worry because they will always be big and strong!

    Somehow I feel less than reassured.

  15. Following these comments on the fact that Norway, Monaco and Lichtenstein have big financial services industries, can any of the advisers on here tell me how often they advise their normal customers (i.e. less than super-rich) to invest in those countries, and why?

Leave a comment


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