Mr.
Timms: People in the income bracket that we are talking
about are very often in a position to renegotiate their pay packages or
delay the taking of income into a later tax year. That is why the
schedule includes the three-year income rule. Otherwise, there would be
a fairly open invitation to people to change their income and so avoid
the
provisions. On
the point about people receiving big redundancy payments, I should
point out that the first £30,000 of any payment would not count
towards income as calculated in the schedule. Even if a payment is more
than £30,000 and takes the person into the £150,000-plus
bracket, they will be affected by the special annual allowance charge
if they make additional, non-regular pensions savings, and only then if
the total savings are more than £20,000 in the year concerned.
However, average total pension contributions by people in that position
will be less than
£20,000. It
is important to bear in mind that, for the majority of pension savers,
schedule 35 changes nothing. They will still benefit from generous tax
relief on their pension savings. Without the rules that we are putting
in place, forestalling is more likely to be undertaken by people over
50, because they are more likely to have access to the ready cash
required. They would not have to wait so long to retain the tax-free
lump sum. I therefore urge the hon. Gentleman not to press amendment
204, because it would be an invitation to avoidance. Of those with an
income of £150,000 or more, it is likely that many are aged over
50 and will have access to the most spare
cash. On
the point about people selling a business, I can reassure the hon.
Gentleman that capital gains are not included in the definition of
income in the schedule. I hope that that is reassuring. He also invited
me to tell him how much his amendment would cost. It would cost
£300 million this year, £700 million next year and
£1 billion
altogether.
Mr.
Hoban: I am grateful to the Minister for providing the
costs at the tail end of his speech. I knew that they would come in due
course. The Minister made clear the Government’s starting point,
which is to minimise any
tax leakage. That is the clear thrust of the measure. A balance needs to
be struck, but my concern is that, in the Government’s desire to
minimise tax leakage, there is a risk that they will
overlook—
10.25
am The
Chairman adjourned the Committee without Question put (Standing Order
No.
88). Adjourned
till this day at One
o’clock.
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