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Barnett Waddingham urges the Treasury to scrap proposals for schemes to pay member tax charges

Andrew Roberts, Partner at actuaries and consultants Barnett Waddingham LLP, is urging the Treasury to scrap proposals for schemes to pay members' tax charges in place of a simpler system that would allow members to pay themselves but spread over a number of years.

"The Treasury are rightly concerned about the secondary effects of reducing the annual allowance and they are keen that pension schemes pay annual allowance charges on behalf of individuals.

“I propose a simpler approach: collect the charges through the personal taxation system, but spread over the individual's working lifetime - i.e. up to age 65 - or five years if longer.  A sensible rate of interest could be applied to encourage early settlement.

“Most of those affected could afford a payment plan and as a long stop they could pay the tax out of their retirement lump sum.  Final salary schemes would not normally have a retirement age of later than age 65 and money purchase schemes can be accessed from age 55, so this should work.

“We should steer away from complicated legislation and procedures and go for the obvious route."

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