The basic rate of income tax goes down from 22% to 20%, from the start of the new tax year on 6 April 2008. The starting rate of income tax, currently 10%, will also be removed.

Mailing to customers, and employers
From Monday (4 February 2008), Standard Life will be writing to individual pension customers, and group pension scheme employers to make them aware of the impact that the basic rate income tax change will have.

Individual Pensions
We will be writing to all individual pension customers currently making regular payments to make them aware that their net payments will be changing due to the change in basic tax relief. The letters encourage customers to contact their financial adviser, if they wish to discuss their plan.

Customers will receive a letter and a leaflet, depending on what type of pension policy they have with Standard Life – an individual pension, or a Self Invested Personal Pension (SIPP). The links below provide examples of what customers will receive:

Individual Pensions - letter and leaflet.
SIPP - letter and leaflet.

The change may also have an impact on clients' net payments received from annuities and income drawdown.

Group Pensions
We will be writing to all employers. The employer letter outlines how the employees’ pension payments will be affected, and what the employer needs to do by 18 March.

Opportunities
Clients may wish to take advantage of the “extra 2%” tax relief prior to the change taking place by making a single payment or increasing regular payments in the current tax year.

Important dates

• All fixed Direct Debit increments, renewals, and recommencements must be received by 21 March 2008.
• All ad-hoc Direct Debit increments, renewals, and recommencements must be received by 1 April 2008.
• Single or regular payments and application forms for monies to be applied before the end of the current tax year, must be with Standard Life on or before 5 April 2008.

Further information
For more on the basic rate income tax change, including opportunities, and details of our previous mailing to employers, please see the Pensions News Instant, that was issued back in November.

If you require any further information please contact your usual Standard Life office.

Tax and legislation are liable to change. This information is based on Standard Life's current understanding of law and HM Revenue & Customs practice. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments.