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Standard says Brown has three Asp options

Standard Life says Chancellor Gordon Brown has three options for clamping down on Asps in his Pre-Budget report.

It is illegal for the Government to restrict Asps to a specific religious group as it would breach religious discrimination rules and Standard says this leaves the Government with three options.

The first option would be to impose additional tax charges on Asps and the Government could tax Asps out of existence by creating a big enough deterrent to ensure that no one would use them.

The second option is to make adjustments to Asps, such as forcing members to take a minimum income which would increase the Government’s tax revenue in the early years.

The final option is to scrap Asps completely but Standard does not believe the Government will go down this route because such a U-turn would be embarrassing.

Standard Life marketing technical manager Andrew Tully says: “If the Government makes another major policy about turn, it risks further damaging the already low confidence which people have about pensions. Asp is and always will be a niche product and it gives the Government a bigger tax revenue than an annuity does.

“If the Government wants to have more control over when it receives tax, then there are various ways they can tweak Asps without taxing it out of existence as they did with residential property almost exactly one year ago.”

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