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Pension loophole could cost the Treasury millions

As the furore regarding the introduction of the 50% tax rate in the UK starts to calm down it has been revealed that a loophole in the regulations will allow those pulled into the 50% tax band to claim back 50p out of every pound they contribute to their pension schemes. In a move which undermines Alistair Darling and Gordon Brown's attempt to tax the rich and help low-income families this will come as a significant embarrassment to the government.

While this particular pensions loophole only appears to be valid for 12 months there is a suspicion that those earning between £150,000 and £160,000 a year will be able to claim pension tax credits from 2011 onwards. Due to the complex nature of the new tax, and pension regulations introduced by the government, there would appear to be a number of ways for higher earners to combat the underlying increase in changes.

Even though Alistair Darling has promised to address the potential loopholes as soon as possible it will take some time to change legislation amid claims that the UK government rushed through the 50% tax band at the last minute. Single-handedly, Alistair Darling and Gordon Brown have already ridiculed their own budget without the help of opposition parties!

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