View more on these topics

Rethink of commutation tax

by James Phillipps

The Government is to review the controversial tax treatment of trivial commutation pensions taken as cash that can see the poorest pensioners paying more than 30 per cent tax on their savings.

Although this tax is reclaimable, experts say much of it is unlikely to be reclaimed in the same way that many of the worst off pensioners do not claim pension tax credits.

This also threatens to undermine the Government’s Personal Accounts regime, which is set to be introduced in 2012.

The Department for Work and Pensions recently said that a key component of ensuring the Government can say it pays to save in Personal Accounts was ensuring that the poorest pensioners could take their trivial commutation pension – pension pots below £15,000 – with little or no tax paid.

The tax problem arises because the Government assumes that everyone is a higher-rate taxpayer and does not take into account individuals’ personal allowances, which hits the over-65s hard because many are lower or basic-rate taxpayers.

Hargreaves Lansdown head of pensions research Tom McPhail says: “The Government should charge basic-rate tax at the outset and square up later or get people to fill in a certificate outlining how much tax they are likely to pay in the year.”

Recommended

Bradshaw to chair board at Sumus

Paul Bradshaw is to chair the board at Sumus, trading name of the Falcon Group and FSAS.Bradshaw is chairman of Nucleus Financial and non-exec director of Merchant Investors Assurance.He has run a number of financial services businesses including Skandia Life, Scottish Amicable International and latterly Abbey’s insurance and asset management operations. Head of investment solutions […]

Restoring the public’s faith in MPPI

Whether you are an IFA, directly authorised firm or an appointed representative, selling mortgage payment protection insurance has certainly raised a few questions over recent months. Negative headlines in the press have done nothing to install confidence in either adviser or consumer when it comes to selling and buying MPPI. Although MPPI itself has not […]

What can drive the India story forward?

By Kunal Desai, head of Indian equities, Neptune Since the election of Narendra Modi as prime minister in May 2014, Indian equities have gone on to outperform both developed and emerging markets. A busy period of governmental and economic reforms, a lower oil price and falling political risk have been the primary drivers over this […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com