A pension investor who has been hit with a £470,000 tax bill for breaking the lifetime allowance is preparing a case against the stockbroking firm that was advising him.
The investor, who is a client of BT3, a subsidiary of law firm Blake-Turner & Co Solicitors, claims the stockbroker failed to notify him of the 55 per cent tax charge he would incur by continuing to make pension contributions. The firm expects to launch proceedings against the as yet unnamed stockbroker in the near future.
BT3 consultant Andrew Willoughby says stockbrokers and financial advisers should be aware of the likelihood of an increase in such claims as a result of the series of reductions in the lifetime allowance, which stood at £1.8m four years ago but which has been reduced to £1m in this year’s Budget, taking effect from next year.
Willoughby says: “We are currently evaluating the client’s claim against a well-known stockbroker and it is likely that proceedings are going to be issued.
“The LTA has come down from £1.8m to £1m in a very short period. Advisers who set up arrangements for clients just a few years ago could find they are well over the limits today. Advisers will need to be increasingly careful about these claims going forward.”