JLT Benefit Solutions Outlines 2010 Budget Wish List
12th April 2010, London: JLT Benefit Solutions (JLT) today outlines its wish list for the 2010 budget:
1. Simplify implementation of restrictions on pensions tax relief
The government is wrong if it thinks tax rate hikes for high earners will not affect ‘ordinary' employees. The proposals are another reason for employers to disengage with pensions and the ramifications will be felt by employees in general, not only those earning more than £150,000.
At very least, a complete rethink is needed on the proposals for 2011/12 onwards and the starting point is for the current consultation document to be confined to the waste paper basket.
2. Leave CGT at 18%
There are strong arguments for gains on long-term capital investments being taxed at a lower rate than income and increases in the capital gains tax rate can actually have a negative effect on revenue if taxpayers delay making disposals.
With marginal income tax rates about to hit 50%, one of the few tax measures in place in the UK that actively encourages individuals to remain in this country - including some of our best entrepreneurs - is our low CGT rate. Any increase won't do much to raise significant additional tax revenue, and will instead serve only to increase ‘brain drain' away from Britain towards more favourable regimes.
3. Don't punish basic rate taxpayers in any budget this year
Though not impossible, the Chancellor is unlikely to announce changes to the basic rate of income tax so close to an election. In any event, we call for a commitment that basic rate tax payers will not be punished, even obliquely, in a revised budget, regardless of which party forms government. Implicit in this is an appeal for pension scheme retirement lump sums to remain tax-free.
4. Encourage further pension scheme participation
Time and time again auto-enrolment has been proven to increase pension scheme participation rates.
We seek clarification on exactly when employers can auto-enrol voluntarily. Regardless of whether they are trust or contract based, employers sponsoring workplace pensions should be allowed to auto-enrol employees now. The established benefits of this process can then start to feed through before the workplace pension reforms are implemented in 2012.
5. Strongly consider issuing more long dated gilts, in particular index-linked gilts
Extreme supply demand imbalances exist in both the long-dated conventional and index-linked gilt markets as pension schemes and other institutional investors such as insurance companies aim to match their long term liabilities with government debt.
This imbalance manifests itself particularly in the index-linked gilt markets where pension schemes have sought inflation protection at almost any cost. Now is the time for the government to consider addressing this imbalance whilst issuing debt on a relatively cheap basis.
--ENDS--
Enquiries:
Jardine Lloyd Thompson Group plc
Paul Dransfield
Tel: 020 7528 4933
JLT Benefit Solutions
Simon Hazeldine
Tel: 01727 775 102
Editor's Notes:
About Jardine Lloyd Thompson Group plc
Jardine Lloyd Thompson Group plc (JLT) is an international group of Risk Specialists and Employee Benefits Consultants and one of the largest companies of its type in the world. JLT offers a distinctive choice to clients and partners through our combination of independence, scale and specialism.
Jardine Lloyd Thompson Group plc is quoted on the London Stock Exchange and employs 6,000 people worldwide and through JLT NetworkTM provides services in more than 120 countries.
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