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If you are covering the speech given by the BMA yesterday referencing the tapered annual allowance and reports that Rishi Sunak is going to address the issue in the upcoming budget, please see the following comment from head of development in the dental and medical division at Quilter Financial Advisers, Graham Crossley:
“Why ministers are so intent on dying in a ditch to defend this ill-considered policy is absolutely beyond comprehension. The ‘omnishambles’ Budget under the Coalition government should have taught ministers firstly, not to introduce policies without proper consideration, but secondly to listen to practitioners and reverse policies that are shown to hold disastrous unintended consequences.
“The Tapered Annual Allowance is simply too complex in the first place, creating a tax planning minefield for high earners that want to save into a pension. But it is especially damaging when it applies in the context of defined benefit schemes. The structure of schemes like the NHS pension means it is impractical to revise down contributions to avoid the tax penalty, and workers are often choosing to cut their hours instead. It’s likely that the thinking behind this move is that the taper tinker will move the cliff edge away for most doctors and the introduction of the NHS Pension contribution flexibility will enable most to fit within AA limits. However, this is adding complexity on an already overcomplicated system and is an archetypal example of a policy dreamed up in Westminster with nil sympathy for the practical application on the ground.
“Tinkering with the system is not going to solve the problem. Government would be well advised simply to remove the tapered allowance altogether. For those that are concerned about the taper, it is really important to speak to a qualified financial adviser. If you’re hit with the tax penalty there are different ways to plan around the issues, including exercising the ‘scheme pays’ option, although this will impact the value of your benefits in the future. There are other options and speaking to a financial adviser will help to navigate the system in the most tax efficient manner possible.”
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Notes to Editors:
About Quilter plc:
Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.
Quilter plc oversees £95.3 billion in customer investments (as at 31 March 2020).
It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.
The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.
Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.
Wealth Platforms includes Old Mutual Wealth UK platform and Quilter International, including AAM Advisory in Singapore.
The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.
Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows:
This press release is for journalists only and should not be relied upon by financial advisers or customers.
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This communication is issued by Quilter plc. Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270. Registered in England.