AJ Bell calls for simpler pensions tax relief

The self invested personal pensions (Sipp) provider said it welcomed the governments proposals but further simplification was possible.

Billy Mackay, marketing director at AJ Bell, said a reduced annual allowance was the simplest way of ensuring a small number of wealthy investors did not benefit from a disproportionate share of the tax reliefs available ruining it for the rest.

He said: "We need to challenge the strength of the proposals under the banner of simplicity.

"If you do this there is an argument that says the government should look to reduce the amount of the annual allowance to say £35,000 if that then allows you to continue the current basis of granting tax relief at the marginal rate.

"Also, the new excess annual allowance tax charge for people who exceed the contribution allowance introduces added complexity without reason.

"The current charge to tax at 40 per cent acts as a deterrent and is simple."