Switching from a final salary pension to an independent plan could substantially boost the amount of tax-free cash you can take, says the Telegraph.

Under a typical final salary scheme rules, the fund is valued at 20 times the pension, so if you had a £10,000 pension entitlement the fund would be worth £200,000 and you could take a quarter of that or £50,000 as tax-free cash. But many schemes now offer much higher transfer values of up to 40 times the annual pension, and if you transferred at that valuation your tax-free cash entitlement would be £100,000. But, warns the Telegraph, it remains a risky thing to do since you are giving up irreplaceable lifetime pension guarantees.

HMRC’s auto-tax experiment

Between now and Christmas, some 400,000 people who normally complete a tax return will instead receive in the post from HMRC a ‘simple assessment form’, already pre-filled using data held by the taxman. The forms are going to two groups of people: new state pensioners whose income is above the personal allowance and PAYE taxpayers – most employed people – who have underpaid tax by a significant amount, perhaps because they enjoy a workplace benefit on which further tax is due. HMRC hopes people will just agree the figures and pay the tax. But experts warned that the three-quarters of smaller firms recently surveyed had no idea about this, says the Financial Times. The Department of Education has issued a new guide for employers to better explain how it works and how they can apply for funding.

Apprenticeship confusion

The apprenticeship levy was introduced six months ago by the government as part of plan to create 3 million new apprenticeships by 2020. Large businesses pay an apprenticeship levy, while smaller companies do not pay the levy but are entitled to apply for scheme funding. Yet three-quarters of smaller firms recently surveyed had no idea about this, says the Financial Times. The Department of Education has issued a new guide for employers to better explain how it works and how they can apply for funding.

Rental cost soars

The amount of rent paid on residential properties in the year to June was £54 billion, says the Financial Times, having risen by £14 billion since 2012 – and over that period the amount of interest paid by homeowners on mortgages has shrunk by £6.4 billion to £26 billion. The number of homes that are rented has risen by 20 per cent in the past five years, partly because young people cannot accumulate the capital they need for a deposit on a home.

VCTs rush for the money

Venture Capital Trusts, which normally raise fresh money from investors towards the end of the year, have brought forward their capital-raising activities because of fears that the Budget may restrict the tax reliefs they enjoy, says the Telegraph. Subscriptions for new shares qualify for a 30 per cent tax rebate, so long as the shares are held for at least 5 years, as well as tax-free dividends and exemption from capital gains tax on any profits. At least 25 trusts are currently offering new shares to investors.

Put and take

The Financial Times published a chart showing the average amount an individual contributed to or took from the state at different stages of life. Unsurprisingly, young people take a lot more than they pay because of the cost of education, while between the ages of 25 and 65 most people pay more in taxes than they take out of the system. In old age, most people take out more through health and welfare costs than they contribute (on average a 90-year-old costs the state £30,000 a year). Overall,  most people get back roughly what they put in, though the latest government figures suggest that those born since 2011 could expect over their lifetimes to pay in about £70,000 more than they received on the basis of the current system and rules.

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