Aside from the news on residential property / SIPPs which made the headlines, has anyone seen the proposals to stop individuals recycling tax-free cash from pensions ?
i.e. take a tax-free lump from a pension scheme, invest that in a new personal pension, get tax relief on it, then take a further 25% lump sum in the future - and on and on, etc...
It is stated they plan to implement an 'anti-avoidance' rule to prevent this abuse. i.e. they will 'remove the tax advantages in relation to lump-sums artificially generated in this way'
I'm just wondering how this will be monitored ?
Will it be necessary to apply to the local tax-inspector to take a lump sum ? Will it be tied to NI Numbers and logged with pension providers ?
I've known lots of individuals who entered pension fund withdrawal (income drawdown), but don't always really need the income (i.e. because it will push them into higher rate territory) so they plough it back into a new personal pension. This seemed quite a sensible tax-planning exercise. Will this now be considered 'abuse' ?
I'm also wondering what other crap they will come up with before next April......