Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will suspend the 2019 Loan Charge and associated settlements and launch an independent review of the effects of that charge on people subject to it; and if he will make a statement.
Answered by Jesse Norman
Disguised remuneration schemes are contrived arrangements that use loan payments in place of ordinary remuneration, usually through an offshore trust, with the purpose of avoiding tax. These loans are no different to normal income in their purpose and effect, and HMRC’s position is that they are, and have always been, taxable.
In accordance with an amendment to the Finance Act 2019, the Government published a report into disguised remuneration schemes. This can be found online at: www.gov.uk/government/publications/report-on-time-limits-and-the-disguised-remuneration-loan-charge. The Government has no plans to review the policy.
HMRC offers a range of taxpayer support services, both directly and through independent organisations, and would strongly encourage anyone who is affected by the charge to contact them and discuss their situation.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what his policy is on enabling pensioners who were obliged to buy annuities to transfer their investment into alternative financial vehicles; and if he will make a statement.
Answered by Simon Kirby
In April 2015, the Government introduced the pension freedoms to give individuals greater flexibility in how they access their pension savings (from the age of 55) by removing the obligation for people to buy an annuity upon retirement. However, these flexibilities did not apply to those individuals who had already purchased an annuity.
In order to extend the flexibilities to these individuals, at the March Budget 2015 the Government announced its intention to remove the restrictions on the sale of existing annuities and to create the conditions for a secondary market in annuities to develop. The Government expected that for most people continuing to hold their annuity would be the right decision, but wanted to give people choice over how they use their money.
However, as the policy developed it became increasingly clear that consumers would have received poor value for their income streams and the conditions to allow a vibrant and competitive market to emerge, with multiple buyers and sellers of annuities, could not be created with sufficient consumer protections. In these circumstances the Government concluded that it would not be in consumers’ interests to continue with this policy. The Government announced in October 2016 that it would no longer be continuing with proposals for a secondary market in annuities.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what assessment his Department made of the viability of the secondary annuities market, before its announcement of a scheme to enable pensioners to sell their annuities.
Answered by Simon Kirby
Prior to announcing proposals for a secondary market in annuities, the Government consulted a broad evidence base to understand how this market might operate. This includes modelling estimates of how many annuity holders might sell their annuity, and a consideration of the views expressed by annuity providers and other potential market participants.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what discussions his Department had with representatives of the annuities industry before taking the decision to (a) allow the sale of annuities and (b) revoke that policy; and when did such discussions take place.
Answered by Simon Kirby
Following the Chancellor’s announcement of pension freedoms at Budget 2014, several organisations contacted the Government to suggest ways these flexibilities could be extended to existing annuity holders. These suggestions led to HM Treasury having discussions with a range of potential market participants, including annuity providers, about the prospect of a secondary market in annuities. These discussions culminated in the announcement at March Budget 2015 that the Government would create the conditions to allow a secondary market in annuities to develop.
Throughout the development of the policy the Government continued to engage extensively with the pensions and investment industry, consumer groups and financial regulators on how to create a competitive secondary market in annuities.