Pensions - Articles - Sensible initiatives to simplify pension tax system

 ACA Pensions Taxation Committee Chair, Karen Goldschmidt comments: “For schemes where tax relief is given via Relief at Source, currently higher-rate taxpayers get part of their relief on their personal contributions by claiming from HMRC (e.g. via their tax returns) but many miss out due to ignorance or inertia – overall it is estimated losing £750 million in relief: a change so that the schemes pass individual contribution information to HMRC would mean these savers get their rightful pensions tax relief automatically and/or earlier.

 “However, any changes that OTS proposes must be realistic, manageable and proportionate and not result in inappropriate administrative burdens for employers and pension scheme providers. In particular, changes to try to enable HMRC to take over automatic management of the infamously complicated Annual Allowance are unlikely to be practical or worth the information burden that would be involved especially for Defined Benefit savings. Any OTS proposals need to recognise that Government may well overhaul the pensions tax regime soon - and any regime change from the Government needs to learn from the AA challenges and be deliverable without creating huge administration burdens”.