Tax products and fees

By Peter Kralj, LL.B LL.M

The British government uses the tax system in order to encourage a certain kind of investment. It gives tax relief for example on pension fund contributions. This is temporary relief because when the money is drawn in the form of a pension, the taxpayer is liable for tax on the full amount. This topic is discussed more fully in another paper.

Unfortunately the Government insists on one’s savings being conducted through intermediaries who charge fees for their services. Few savers ask their pension fund managers to compare the tax savings with the fees that are charged. If they did so, they might be surprised as to how much benefit – if any – they are really receiving and who benefits from the tax relief. In some cases it is better to pay the tax than suffer the fees of the intermediaries.

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