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Winterthur says Asps still offer opportunities

Winterthur says Asp can still be used as part of financial planning and there are ways to keep the surplus on Asp tax free.

Pension strategy manager Mike Morrison says: “ASP still offers considerable scope for financial planning. With such a large tax charge on second death, our view is that it makes sense to minimise the amount that could be taxed.”

Morrison says this could mean using other more tax efficient investment vehicles for any excess income or even third party pension contributions.

But he says there are still some serious issues under the surface, which arise in relation to making Asp an unauthorised payment. Under the existing legislation the unauthorised payments charge and surcharge have to be paid by the beneficiary not the scheme.

Morrison says: “We therefore have the ridiculous situation of a beneficiary having to find the tax to enable receipt of any payment into their scheme. Secondly, legislation on unauthorised payments penalise schemes that pay out such payments with a possible deregistration charge.

“Although many have focused on a headline tax of 70 or 82 per cent which implies a return of the rest, it is actually unlikely to be a realistic option as schemes will not want to trigger a further charge and risk being deregistered.

“The only real option for keeping the surplus tax free is to pay it to a charity. I am very supportive of charitable giving, however it does not seem right that people are forced to give money to charity to avoid tax and ultimately I believe it should be a matter of choice.”


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