View more on these topics

Revenue warns pension advisers

IFAs must reconsider retirement planning for high-earners in light of Budget changes to higher-rate pension tax relief, according to Informed Choice.

Joint managing director Martin Bamford says the move will make contributing into a pension less attractive for people earning more than £150,000.

He says: “This will mean investing in non-pension vehicles and could result in retirement planning becoming more holistic. Sources of potential income in retirement could include cash, property and business assets.”

Bamford says people earning between £100,000 and £150,000 should make pension contributions to help preserve personal allowances from next tax year.

Hargreaves Lansdown pensions analyst Laith Khalaf says that while the changes currently only apply to a limited number of people, the Budget’s growth assumptions are very generous and if the economy does not hit the mark, higher-rate relief may be cut further.

“Next year we could be looking back at this and thinking it was the thin edge of the wedge.”

Khalaf says people earning more than £150,000 should use the £20,000 allowance to get higher-rate relief now and consider other tax-relievable investments like VCTs and enterprise investment schemes, after Isas. He says people earning between £100,000 and £112,950 should use salary sacrifice to avoid a 60 per cent income tax due to the staggered withdrawal of the personal allowance at this level.

But in the Budget notes, HMRC warns against advisers trying to find “clever ways” to reduce their clients’ income below the £150,000 threshold.

It says: “You may end up with tax relief restricted to basic rate on some or all of your normal ongoing contributions, which would otherwise have been relieved at higher rates of tax.”

HMRC says it will look closely at tax avoidance measures and pursue them vigorously.


Nationwide moves to 3.99% rate

Nationwide will revert new clients to a 3.99 per cent standard rate instead of its 2.5 per cent SVR. It says the move will increase savings returns.

Age cap holds back Isa rise

After years of pressure from the financial services industry, the Government has finally decided to raise the annual Isa allowance by £3,000.

Japan revises growth forecast

The Bank of Japan has issued a downbeat report on the country’s economy and reduced forecasts for growth. In January, policy board members forecast a contraction of 2% in the economy but this has since been revised to 3.2%. The report says: “Economic conditions in Japan have deteriorated significantly… In the corporate sector, exports have […]


News and expert analysis straight to your inbox

Sign up


    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