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Barnett Waddingham lobbies for auto-enrolment tax trap to be removed

Barnett Waddingham has set up an e-petition to amend auto-enrolment legislation to exclude those with Enhanced Protection and Fixed Protection, so that unwarranted tax charges are avoided.

Responding to news that HM Revenue & Customs have written to individuals with Enhanced Protection last month warning them of potential tax charges as a consequence of auto-enrolment,  Andrew Roberts, partner at Barnett Waddingham, created an e-petition after previous attempts to draw attention to this matter had stalled.

Andrew Roberts commented:

“The whole point of auto-enrolment legislation is to get people saving for their retirement by moving to an opt-out system rather than an opt-in system.  But there will be around 100,000 people who already have sufficient pension provision, to the extent that they have registered for lifetime allowance protection.  Auto-enrolment is clearly not suitable for these people.  Worse still, there is only a downside for them - that they forget to opt-out, end up losing their lifetime allowance protection and having a tax charge applied to their pension.

“We need these 100,000 people and their families to sign the e-petition so that this issue can be granted ministerial time rather than be ignored.  You cannot just ignore those at the top end of pension saving when drafting pension legislation.”

Andrew Roberts, who also serves as the Chairman of the Association of Member-Directed Pension Schemes (AMPS), added that AMPS had written to DWP in October 2011 with suggested changes to the Pensions Act 2008 to deal with the issue without success, but had at least convinced HMRC to include warnings about the dangers of not opting-out as part of the Fixed Protection application process.

The e-petition can be viewed at http://epetitions.direct.gov.uk/petitions/36875 and Andrew Roberts encourages all involved in the pension industry to support the e-petition and promote it to those with lifetime allowance.

For more information please contact Andrew Roberts or Steph Gold.

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