James Jones-Tinsley, Self-Invested Technical Specialist at Barnett Waddingham, said: “It’s a tale as old as time – a much anticipated day of policy reform has left the pensions industry shocked by the deafening silence of the Government on the issues that matter most. With barely a bullet point dedicated to a handful of technical updates, trustees, advisers, and savers alike have been disappointed.
“At the very least, a simplification of pension tax relief is well overdue – and in fact, it was a manifesto commitment of this Government to support the 1.5m low-paid workers, mostly women, harmed by the tax relief discrepancy between ‘relief at source’ and ‘net pay’ workplace pension schemes. We should have seen a scrapping of the Money Purchase Annual Allowance (MPAA), which has been revealed as negatively impacting 1,000 savers each working day, as well as the abolition of the harmful Tapered Annual Allowance (TAA). Instead, the Treasury has squandered the opportunity to make real change – and the clock is ticking. If we don’t see action soon, the UK’s looming pensions crisis is only going to get worse.”
Steven Cameron, Pensions Director at Aegon comments: “There’s much to be welcomed in the HM Treasury and HMRC package of ‘tax day’ consultations, even if it appears to have lived up to its billing as day mainly for the most technical of tax enthusiasts. Efforts to make tax digital, remove sources of error and clamp down on tax avoidance and evasion are all positive developments and should continue to reduce the ‘tax gap’ as we seek economic recovery. As part of this, it’s important that drives to ‘improve people’s experience of the tax system’ extend to making it easier to claim all tax relief entitlements. Within pensions, higher and additional rate taxpayers who are in ‘relief at source’ schemes have to separately reclaim relief above the basic rate, and there’s anecdotal evidence that many forget to do so. Even more concerning, there are growing numbers of low paid individuals in ‘net pay’ pension schemes who because they don’t pay income tax, don’t get the 20% tax relief their peers in ‘relief at source’ schemes get by default. We urge the Treasury and HMRC to prioritise doing the right thing by those who are currently missing out on their pension tax relief entitlements.
“Otherwise, tax day gives us no new insights into what the Chancellor may have planned for reforms of pensions tax relief, capital gains tax or inheritance tax. There had been speculation that he could have launched ‘what if’ consultations exploring the admin implications of a range of possible reforms. Such reforms can be highly complex in practice and warrant detailed advance scrutiny to make sure they are workable and can deliver on their objectives. The Chancellor has talked of his ‘sacred duty’ to repair the nation’s finance, and in advance of taking forward policies, it’s always worth checking these won’t be sunk by the ‘devil in the detail’.”
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