AbrdnNov 3 2016

Fundamental review of tax relief expected post-Brexit

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Fundamental review of tax relief expected post-Brexit

A "fundamental" review of tax relief is expected post-Brexit, instead of complex small changes to the systems, according to Jamie Jenkins, head of pensions strategy at Standard Life.

On June 24 this year, the UK voted to sever its 43-year membership of the European Union in a close vote which created turmoil in the currency markets.

The vote sent the pound falling to a 30-year low against the dollar, from which it has not recovered.

But speaking at an event held in London yesterday (2 November) on the topic of Brexit, Mr Jenkins highlighted as the most crucial issue not sterling but the UK's estimated £72.5bn in fiscal deficit.

He said this was "probably the most important number" in a range of factors to consider post-Brexit.

He went on to make the link between the deficit and the cost to the Treasury of providing tax reliefs.

In July 2015's consultation pre-Brexit, the Treasury estimated the cost of tax relief on both income tax and national insurance contributions at £50bn.

Mr Jenkins told FTAdviser that figure was "clearly in the mix of things that any government would consider and I would expect it is being looked at".

"I would expect a more fundamental review of tax relief rather than combined changes to the annual allowance and lifetime allowance."

In his speech he said of the £50bn figure: "It's a significant number- they can't ignore it."

Also on the topic of Brexit, Mike Morrison, head of platform technical at AJ Bell said most law affecting pensions from Europe was employment law.

He added there could be some changes, for example with regard to MiFID II and IORPs.

He said: "There are a few interesting parts we can choose to take."

He added the industry could do without the law surrounding the equalisation of GMPs, adding questions would be raised on accrual of state pensions for expats. 

This morning, sterling moved higher after the High Court ruled that the UK government did not have the power to begin EU divorce proceedings without a parliamentary vote.

ruth.gillbe@ft.com