Maintaining lifetime allowance is a "tax on investment performance"

Skandia head of tax and financial planning Colin Jelley has warned that maintaining the lifetime allowance creates an effective tax on investment performance.

The Treasury today announced plans to cut the annual allowance from £255,000 to £50,000 and the lifetime allowance from £1.8m to £1.5m.

.Jelley had been lobbying for a removal of the lifetime allowance suggesting it acts as a tax on investment performance for those at the top end of the earnings scale.

He adds: “We are disappointed they’ve maintained the lifetime allowance - why penalise people whose funds perform particularly well? Effectively, by having a control of the funding level at £50,000 a year, they’re imposing a tax on people who have successful investment performance by retaining the lifetime allowance. That seems incredibly unfair - they’re trying to have their cake and eat it.”