Clause 211 - Non-residence: money purchase arrangements

Part of Finance Bill – in a Public Bill Committee at 2:45 pm on 17th June 2004.

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Photo of George Osborne George Osborne Conservative, Tatton 2:45 pm, 17th June 2004

I beg to move amendment No. 417, in

clause 211, page 177, line 30, after 'is', insert

'that part of the value of the individual's benefits under the arrangement which relate to'.

Clauses 210 and 211 are about calculating the lifetime allowance for people who have been non-resident in the UK and have, therefore, not benefited from UK tax relief, but are members of UK pension schemes and have made contributions to those schemes. The clauses disregard those contributions for the purpose of the lifetime allowance or, rather, they increase the lifetime allowance by the equivalent of those contributions.

However—this is the point of our amendment—the lifetime allowance increases only by the amount of the contributions made and not by the investment growth on those contributions. That seems unnecessarily harsh and unfair. More and more people work in different countries and attempt are being made throughout Europe to encourage more Europe-wide pension schemes.

One hopes that Britain is well placed to take advantage of that attempt because it has such a successful financial services industry. We want to do what we can to encourage the industry, but it seems that we are placing a small hurdle in the way of the pensions sector. That is, as I said, unfair. The Government have conceded the principle that the contributions have not attracted tax relief and the lifetime allowance should be increased as a result. Surely the same principle extends to any investment growth on those contributions.