The ABI and pension providers have been lobbying Customs & Excise for fees under stakeholder to be e...
The ABI and pension providers have been lobbying Customs & Excise for fees under stakeholder to be exempt from VAT.
The Government agreed late last year to allow for a separate charge to cover the cost of advice above 1%. Fee-based advice must be drawn up as a separate contract to the pension scheme in stakeholder and it is subject to VAT. The ABI is still awaiting a decision from the Government on whether this payment can be made exempt.
Bridget Moss, pensions manager at the ABI, said: "We have had a meeting with the relevant authorities and it is still under discussion. When additional services such as advice is done as a separate contract it comes out of the pension tax relief umbrella. We think this is an uneven playing field for the lower paid as the tax system may put off people from starting a pension plan. The problem with the VAT though is that it is based on European law and the Government has limited manoeuvring of where it is applied."
Whatever the outcome of the VAT exemption, consumers would still be better off using a commission based system under pension arrangements, John Glendinning, pensions director at Scottish Amicable said.
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