Comment on the Government’s consultation into the administration of pensions tax
21 Jul 2020
Commenting on the decision of the Government to launch a consultation into the administration of pensions tax relief, Mike Ambery, Head of DC Provider Relations, Hymans Robertson, says:
“It is really good to see that the Government is finally getting around to keeping its manifesto promise of looking at the issue of differential tax-relief treatment between Relief-at-Source and Net Pay schemes and the impact this has on the lower paid. This will help the 1.5 million individuals who currently lose around £150m a year because of the way in which their pension is taxed.
“However, while we are supportive of this issue being addressed any solution needs to be put in context of the overall £40bn tax relief bill. It’s a fiendishly complex issue to address and the Government needs to take care that it doesn’t adversely impact the wider tax-relief processes. The four solutions outlined by the Government in this consultation seem too complicated and the idea of moving all DC schemes to RAS feels like an extreme fix for the scale of the problem.
“We know that there will not be a “perfect” solution to addressing this issue, but more must be done. What’s really needed is a full and fundamental review of the whole tax-relief system, similar to what was abandoned by George Osborne in 2016.”