TAX NEWS - June 2010

UK Tax: Budget sparks pensions dash

Investors are ploughing spare cash into their pensions amid fears that tax relief could be cut back in next week's emergency Budget.

Pension provider AJ Bell says it has recorded a three-fold leap in recent lump-sum payments into pensions as investors shelter as much as possible from the taxman.

Billy Mackay at AJ Bell said: "We can't be sure what will happen in the Budget but clearly investors are taking no chances and making the most of existing tax benefits in case they are scrapped." Laith Khalaf, of independent financial advisor Hargreaves Lansdown, said: "It wouldn't surprise me if the Government scrapped higher-rate tax relief. It would save about £5 billion a year, which would go a long way to funding the £10,000 tax-free personal allowance they have promised."

But Mackay warned: "Investors should be wary of putting more money into their pension fund than they can afford just to beat a deadline that may not exist."