Page last updated 15/10/02
Scheme members have asked if we have read recent reports concerning the Inland Revenue’s draft proposal to tax lump sums.
Our understanding is that Ministers are considering a number of reports on reforming the tax regime including one submitted by the Inland Revenue, which includes the taxing of lump sum retirement grants in excess of £50,000.
The impact of this to an individual would presumably be for amounts in excess of £50,000 to be taxed at the appropriate rate either 22% or 40% but we have no details other than what has been reported in the press.
We are aware that the National Association of Pension Funds, Society of Pension Consultants and the Pension Management Institution have all condemned the plan as it will discourage pension saving which is contrary to government policy.
We also understand that the Confederation of British Industry has approached the Chancellor of the Exchequer to reject the proposal which would be deeply unpopular with people and would undermine planning for retirement.
We must now wait to see what transpires but you may wish to consider writing to your Member of Parliament to express your concerns.
Mike Woodall
Chief Pensions Officer
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