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Bringing you news, views and analysis since 2013

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Relief at no change to pensions tax relief

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Punter Southall’s Head of Research, Jane Beverley, on pension taxation in The Budget…

I’m delighted that the Government has decided not to make any further changes to pensions taxation, as press reports had indicated that it had clearly been considering. The Government appears to have listened to the chorus of concerned voices from the pensions industry, arguing that more alterations to pensions tax relief would be counterproductive and damaging to long-term pension savings.
 
The Budget report notes that there are areas relating to the last round of pension changes (reductions to the lifetime and annual allowances) where further legislation is needed to ensure that it works in line with the policy intent. The focus should now be on ensuring that the current system works and on maintaining a stable system of pensions taxation.
  
Punter Southall’s Head of Private Clients, Henry Denne, on high-rate taxation in The Budget
 
Although allowances have not been changed, the planned reduction of the 50p rate in April 2013 means that people currently in this band should review their pension arrangements between now and April 5th, 2013, to make the most of the 50 per cent tax relief before it drops to 45 per cent.
 
They have a limited time to benefit from this change while it lasts. There is also a carry-forward of up to £50,000 in unused relief from previous tax years. If no pension contributions have been made since 2008/09, then up to £250,000 gross could potentially be contributed before April 2013. If they have sufficient taxable income above £150,000, they can claim 50 per cent tax relief on this contribution. 
 
Punter Southall’s Head of International, Julia Whittle, on corporation tax cuts in The Budget…
 
The Budget is a step towards the UK regaining its status as one of the most fiscally attractive bases from which to run a business. The reduction in corporation tax rates to 24 per cent, together with further planned cuts will be welcomed by prospective foreign investors. It will also give pause for thought to those considering a move away from these shores.
 
The reduction in top-rate tax to 45 per cent from next year sends another positive signal to overseas and British senior executives but a reduction to 40 per cent is what it would take to really make the international rich take notice.
 
Much of the pain of the new taxation of properties held in offshore structures will be felt by the foreign owner. This is unlikely to deter foreign investment dramatically. It could actually open up the top end of the UK housing market with overseas speculators eyeing possible opportunities presented as British buyers struggle to raise the extra seven per cent in stamp duty.

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