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October 13, 2020
Pension exit fees could be capped under new plans announced by the Chancellor George Osborne. It follows complaints over the ‘excessive fees’ charged by some pension providers, which can be up to 20% in some cases. The announcement comes just days ahead of the Chancellor’s Second Budget speech, which is set to take place on 8 July. We will be providing a summary of the main Budget announcements so please visit our website for the latest news and information.
Meanwhile, business leaders have been giving their reactions to the recent Queen’s Speech, which sets out the legislative programme for the coming years. The Speech contained plans for a five-year ban on increases in income tax rates, VAT and national insurance, along with the much-anticipated EU referendum Bill, which will pave the way for an in/out referendum on Britain’s membership of the EU.
Chancellor George Osborne has said that the Government will consider imposing a cap on early exit penalties for people wishing to withdraw money from their pension savings, following complaints about providers charging ‘excessive’ fees. Mr Osborne revealed that the Treasury would investigate fees as part of a consultation starting next month.
New pension rules introduced in April allow people over 55 to withdraw cash from their pension savings, but since not all pension companies are allowing partial cash withdrawals a significant number of savers have been looking to switch providers.
According to the Treasury, 60,000 people have accessed their pension savings since the reforms came into effect, transferring more than £1 billion out of their pension pots.
A consultation will now examine the costs, speed and ease of transferring to a new pension company.
Speaking in the House of Commons, Mr Osborne said: ‘There are clearly concerns that some companies are not doing their part to make [pension] freedoms available. We are investigating how to remove barriers and we are considering now a cap on charges’.
However, the Association of British Insurers (ABI), speaking on behalf of the pension provider industry, claimed that nearly 90% of customers eligible for withdrawing cash from their pension pot would not face early exit fees, and that the fees that were being charged reflected expenses already paid by the provider in setting up the policy.
Responding to the Chancellor’s comments, Huw Evans, director general of the ABI said: ‘We agree that further clarity is needed and have been calling for it for some time. But we reject any suggestions that the industry is putting up unnecessary obstacles to hinder customers exercising their pension options’.
Meanwhile, Labour’s shadow pensions minister, Keith Bradley, criticised the Chancellor for not considering a cap sooner. ‘Osborne’s dithering over a cap on rip-off fees and charges has meant savers who want to access their retirement income have risked losing thousands of pounds,’ he said.
Business leaders have largely welcomed the Conservative’s so-called ‘one-nation’ legislative programme outlined in the Queen’s Speech.
Katja Hall, Deputy Director-General of the Confederation of British Industry (CBI), described it as a ‘jam-packed Queen’s Speech, with a strong focus on stepping up a gear on the economic recovery – locking in growth, creating jobs and boosting investment right across the country’.
She added: ‘Pruning unnecessary red tape from Westminster and Brussels will give firms bursting with potential – especially small and medium-sized ones – the space to grow and thrive’.
Some 26 Bills were announced by the Queen, including the new National Insurance Contributions and Finance Bill, which will enact a pledge not to raise income tax rates, VAT or national insurance before 2020, along with plans to increase the threshold before which people pay income tax to £12,500.
Responding to the plans, Simon Walker, Director General of the Institute of Directors (IoD), said: ‘While IoD members are opposed to increases in the rates of VAT, income tax and national insurance, we consider it imperative that the Government’s commitments do not prevent bold tax reforms to both simplify taxation and reduce the burden upon businesses and individuals.
‘Ensuring that the UK tax system remains responsive to tax reforms introduced by our European and global competitors must be a government priority.’
The Speech also outlined details of a new Enterprise Bill, which aims to cut red tape for business by at least £10 billion over the next five years. Other key announcements include: the Childcare Bill, intended to increase the provision of free childcare to 30 hours per week in England for three- and four-year-olds; the Housing Bill which will extend the right-buy scheme; and the much-anticipated EU Referendum Bill, which will allow for a national referendum on Britain’s continued membership of the European Union, with a vote intended to take place by 2017 at the latest.
A full transcript of the Queen’s Speech can be found on the Government’s website.
Deadline for submission of Form 42 (transactions in shares and securities).
Deadline for submission of EMI40 (EMI Annual Return).
File Taxed Award Scheme Returns, file P11Ds, P11D(b)s and P9Ds. Issue copies of P11Ds or P9Ds to employees.
Deadline for entering into a PAYE Settlement Agreement for 2014/15.
Due date for income tax for the CT61 period to 30 June 2015.
Quarter 1 2015/16 PAYE remittance due.
Final date for payment of 2014/15 Class 1A NICs.
Second payment due date for 2014/15 Class 2 NICs.
Second self assessment payment on account for 2014/15.
Annual adjustment for VAT partial exemption calculations (April VAT year end).
Liability to 5% penalty on any tax unpaid for 2013/14.
Deadline for tax credit Annual Declaration (if estimated, final figures required by 31/01/16).
‘The good news is that real wages are now – finally – growing at a respectable rate by historical standards. The bad news is that this only appears to be happening because of inflation falling to unprecedented levels.’
Matthew Whittaker, Chief Economist at the Resolution Foundation, comments on the news that the UK returned to positive inflation after just one month
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