'Extortionate' ASP tax fear

PENSION expert Mike Morrison has raised fears investors with Alternative Secured Pensions (ASPs) are being hit with taxes so extortionate they could be vetoed under European law.

Morrison, who is pension strategy manager for Winterthur Life, hit out at the Chancellor’s plans, announced in December, to introduce extra charges on top of the original inheritance tax for ASPs.

He said people with their funds in these vehicles could stand to lose as much as 112pc to the taxman and charges that high could be considered a breach of human rights.

His comments come just weeks after Neil Marsh, chief executive of SIPP and SSAS provider Hornbuckle Mitchell, urged people to sign a petition urging the Government to ban what it describes as “draconian” charges.

The taxes are made up from unauthorised payment charges of 40pc, unauthorised payment surcharge of 15pc plus the extra 15pc scheme sanction charge combined with the threat of 40pc inheritance tax.

Add to that the potential for deregistration charges and the tax shoots up to well above 100pc.

It means for many people at death there will be little or nothing from their savings pot to pass on to their heirs, Morrison said.

He added: “Under European law, that is unfair. There is an argument that suggests if it was taken to challenge in the European court, it would not be accepted.

"But who is going to take it to the courts to challenge it?” he said.

The petition against the ASP charges can be accessed online at http://petitions.pm.gov.uk/annuities.

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