HIGH pension tax bills caused by a cut in the annual allowance for final salary pension schemes can be paid directly out of individuals’ pension schemes, Treasury financial secretary Mark Hoban said yesterday.
The legislation will help high earners avoid the sting of a high tax bill in April when the annual allowance falls to £50,000 from £255,000.
Wealthy individuals, who are expected to face bills running to tens of thousands of pounds, will be able to pay any sum higher than £2,000 from their gross pension income.
But tax experts said it would add to the burden on pension schemes.
National Association of Pension Funds senior policy adviser David McCourt said it was “extremely disappointed” at the £2,000 threshold, which would encourage higher uptake of the scheme.
“These changes will add cost and bureaucracy to what already is one of the most complex pensions systems in the world,” he said.
The Treasury also yesterday launched a consultation on its Fair Deal policy to protect pensions of public sector employees transferred to private contractors. It is a response to concerns that expensive pension payments deter contractors from bidding for public sector work.