The ever-increasing complicated pension system also needs to be rectified, according to Sandler. Wh...
The ever-increasing complicated pension system also needs to be rectified, according to Sandler.
While he recommends the Government do something to simplify the regime, including the varying levels of taxation, he falls short of actually proposing how the Government should go about this. It is likely the Pickering Review to follow will tackle this in detail.
However, with regards to the uneven playing field with regards to the tax treatment of pensions products provided by life and non life companies, Sandler has issued recommendations.
He has suggested that the Government considers extending the VAT exemption for pension fund management fees to include those levied by non-life companies.
While conceding that the individual pension account (IPA) was not successful, Sandler is pushing for the Government to work harder to restructure this product as to better enable non-life companies to compete in the pensions market.
As part of this he has also pointed out that the current IPA rules create a discrepancy in the treatment of unit trusts and Oeics over investment trusts with regards to the treatment of stamp duty reserve tax. Sandler wants to see an SDRT exemption for investment trusts within IPAs, which replicates the present exemption given to unit trusts and Oeics. He goes on to suggest that the VAT treatment of investment trust management is unfair as unit trusts and Oeics have an exemption from this tax.
The review states: "Investment trusts are in direct competition with unit trusts/Oeics. Also, the refusal of exemption has been based on the fact that investment trusts are closed ended and are not required to separate the management function - as European comparisons suggest, it is not clear why these features should drive a different VAT treatment."
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