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| X Factor's Gamu faces deportation An X Factor contestant who narrowly missed out on a place for the live finals of the show is facing removal from the UK. bbc.co.uk |
Final-salary pension holders face 'massive' tax relief curb Treasury proposals to shake-up the pension tax relief regime is expected to hit high earners hardestHigher earners face "massive" cuts in pension tax breaks as a result of government proposals due out later this week which will particularly hit those in final-salary schemes, it was claimed today.The Treasury is set to confirm on Thursday that it is planning a new regime on tax relief for the better-off. But Tom McPhail, one of Britain's leading pensions commentators, said the shake-up could mean final-salary scheme members who enjoy large pay rises would then be hit with tax bills running into thousands of pounds. It may encourage many people to "opt out" of their good final-salary schemes, and make money-purchase schemes look more appealing, he claimed.The previous government had planned to restrict the amount of tax relief for which people earning more than £150,000 qualified. But in June, the chancellor, George Osborne, said ministers would consult on other ways to save money on pension contributions for high earners, such as by cutting the annual limit on the amount people can save into a pension each year. It was suggested the government might reduce the current £255,000 annual allowance to between £30,000 and £45,000 in order to deliver a similar saving.McPhail claimed this proposal was likely to be confirmed on Thursday, but said other measures were also planned, such as major changes to the value that is put on final-salary pension benefits.If you have a final-salary pension, your contribution is deemed to be the increase in your annual pension benefits multiplied by 10, explained website Candid Money. Because the annual allowance is set at £255,000, this formula has had no impact on the majority of scheme members. But McPhail and some other commentators believe the multiple might in future be set at between 15 and 20. If the annual limit was reduced to around £40,000 and the formula toughened up, many more people would fall into the net.He gave the example of a 50-year-old man earning £50,000 a year, with 25 years' service, where the benefit is one-sixtieth of final salary for each year's service. If he received a promotion and pay increase to £60,000, he could find himself hit with a £19,000 tax bill at the end of the year, assuming the multiple was set at 17 and the annual limit at £40,000, claimed McPhail, who is head of pensions research at investment firm Hargreaves Lansdown. This is because under the new formula, his pension rights would be equivalent to someone paying almost £88,000 into their pension, but anything above the £40,000 annual allowance would be taxed at 40%."By contrast, if he were in a 'career average' scheme, his pension would be a few thousand pounds a year lower, but he wouldn't be affected by the lower annual allowance, or the £19,000 tax charge," said McPhail.Other changes could also be planned, such as measures relating to the rate of pension tax relief."Everyone will lose if tax relief rates are curbed, because the pension system will become more complicated and, as a consequence, more expensive to run," said McPhail. "The particular losers will be middle/senior managers in final-salary schemes. One consequence of these reforms could be to push final-salary scheme members towards career-average and moneypurchase pensions. Other losers are likely to be those individuals paying in more than around £40,000 a year."The Treasury said it would not comment on "speculation".PensionsPersonal pensionsOccupational pensionsIncome taxTaxTax and spendingLiberal-Conservative coalitionRupert Jonesguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Simon Pegg: 'I am a Nerd' Actor Simon Pegg explains why Star Wars made him a nerd. bbc.co.uk |
David Kelly inquest: Case closed The details of Dr David Kelly's death, made public last week, should provide a final answer to the conspiracy theorists, says Andrew Gilligan. telegraph.co.uk |
Cameron reassures business over immigration Prime minister tells CBI government will adopt a flexible approach that will not impede them from attracting the 'best talent from around the world'David Cameron today sought to reassure Britain's business leaders that the coalition will not block them from recruiting highly skilled staff from around the world when a permanent cap on non-EU immigration is introduced next year.Amid fears among leading British businesses that the cap will put them at a competitive disadvantage, the prime minister told the Confederation of British Industry that he would adopt a flexible approach.In a speech to the CBI annual conference, Cameron said: "Let me give you this assurance. As we control our borders and bring immigration to a manageable level, we will not impede you from attracting the best talent from around the world."The prime minister's remarks were his strongest hint to date that the government will heed the concerns of business as ministers finalise plans for a permanent cap on non-EU immigration that is due to be introduced next April. The government, which introduced a temporary limit of 24,000 skilled non-EU workers in July, wants to reduce net immigration to the tens of thousands.The CBI, which has warned that the temporary cap is already harming British business and is restricting the supply of skilled science researchers, welcomed the prime minister's remarks.Richard Lambert, the director general of the CBI, said: "The prime minister demonstrated a real passion for business and an understanding that only business will create growth ... He also made clear that access to finance and immigration would not be barriers to future growth."Downing Street said after the prime minister's speech: "We all know business have been talking about this issue. That is precisely why we wanted to have this period of consultation – to get the policy right. We were always very clear that we would try to implement that cap in a way that does not impede businesses from attracting the best talent to the UK. The objective is to bring net immigration down to the levels seen in the past – so tens of thousands. But we have not said anything more detailed about precisely how this is going to operate. We will do so in due course."The prime minister's remarks about immigration came as he set out a series of initiatives to boost economic growth less than a week after George Osborne outlined the most drastic fiscal retrenchment in a generation with £81bn of spending cuts by 2015. Cameron, who assured his audience that he had protected the science budget in cash terms, announced:• The first ever UK national plan to "update and modernise" Britain's infrastructure by unlocking £200bn of public and private investment. Cameron, who told his audience that the chancellor had announced an additional £8.6bn in capital spending over the next four years, outlined a series of projects. These include the new high-speed rail link from London to Birmingham, Crossrail in the capital, the Thames Gateway bridge and the Mersey Gateway bridge.• A £200m investment over the next four years in "technology and innovation centres". Based on the German Fraunhofer Institutes, which have been instrumental in developing the MP3 licence, these are designed to improve links between universities and business.• A boost to competition by merging the competition functions of the Office of Fair Trading and the Competition Commission to create a "much tougher and streamlined competition regime".• A £69m investment to encourage private sector investment in offshore wind projects. Cameron said: "We need thousands of offshore turbines in the next decade and beyond – each one as tall as the Gherkin [the Swiss Re skyscraper in London]. Manufacturing these needs large factories which have to be on the coast. Yet neither the factories nor these large port sites currently exist. And that, understandably, is putting off private investors. So we're stepping in."The prime minister dismissed criticisms from Labour that his government had adopted a hands-off approach to boosting growth. "I won't engage in some sterile debate between laissez faire and hands-on government. The question isn't 'Should government be involved?' because it is involved. It taxes. It regulates. It invests."The real question is: what is the right kind of involvement? ... My approach is clear: British business should have no more vocal champion than the British government and that's why I have put the promotion of British commerce and international trade at the heart of our foreign and economic policy."Vince Cable, the business secretary, used his own speech to the CBI this afternoon to warn bankers against awarding themselves generous bonuses. "Of course, there is no point in engaging in a sterile public exchange of insults," he said. "But no one listening to the chancellor's statement last week will be under any doubt of the government's collective determination to ensure that banks act in the interests of the wider economy – and that in the new year they don't engage in another self-indulgent bonus round."He added that it was time for those who ran big companies and took home enormous salaries to "return to planet Earth".Cable said the economy was still in intensive care: "Death was averted by speedy intervention to shore up the banking system to prevent an economic slump. The patient is now being nursed out of intensive care and off steroids. But serious damage has been done and we are only now at the stage of planning rehabilitation."Ed Miliband, the Labour leader, warned that the coalition was risking growth by cutting the deficit so quickly. The coalition plans to eliminate the structural deficit by 2015, in contrast to Labour, which would have halved the deficit over four years."I do fear that the path the government is pursuing is a gamble with growth and jobs," Miliband told the CBI. "They have a programme which will lead to the disappearance of a million private and public sector jobs but no credible plan to replace them."And their refusal to accept that a deficit reduction plan has to be sensitive to changing economic circumstances needlessly makes the British economy a hostage to fortune. Time will tell whether they turn out to be right."Economic policyImmigration and asylumConfederation of British Industry (CBI)David CameronVince CableNicholas Wattguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |