The Government's anti-forestalling rules for higher rate tax relief are putting SIPPs and smaller pension schemes at a huge disadvantage to larger group schemes, industry experts say.
Recent draft tax codes, released by HMRC, reveal wealthy individuals who switch pension provider will be limited to just £20,000 in tax-free contributions, regardless of their previous payment history, but the rules will not be applied evenly across all schemes. Anti-forestalling was intended to prevent pension savers earning more than £150,000 a year from making unusual bulk pension contributions, in order to avoid new taxes due for 2011. Unless investors have a regular contribution history and stick to it, they will face tax on contributions over £20,000 in the 2009/10 and 2010/11 tax...
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