Distribution firm boss urges pension tax U-turn

A warehousing and distribution company boss has called on the Government to make an inheritance tax U-turn.

Paul Stiller says plans to bring unused pension funds – including small self-administered schemes – into the headline levy are jeopardising businesses' futures.

He says the “ill-advised” blueprint could have “much wider consequences for investment, growth and jobs”.

Paul, a director at family-run Stiller Warehousing and Distribution, based in Newton Aycliffe, County Durham, has written to Chancellor John Healey ahead of the Budget, urging Britain’s latest fiscal chief to avoid “damaging a source of investment particularly important to small and medium-sized businesses”.

The small self-administered scheme trustee warns Westminster’s planned changes are already damaging the “willingness of similar trustees and business owners to make long-term investments, particularly in commercial property and growing businesses”.

He said: “Small self-administered scheme pensions have existed for more than 50 years, and have become an important source of patient capital for Britain’s owner-managed businesses.

“The prospect of losing 40 per cent of the remaining value of these assets to inheritance tax is changing investment behaviour now.

“Trustees who might previously have invested for the long term are asking whether they should instead preserve liquidity.”

Paul, whose father – and former German prisoner of war – Gunter Stiller founded the family business more than 70 years ago after selling a herd of pigs to buy his first vehicle, added: “There is a better way. 

“The Treasury should look at a tax on the annual investment surpluses generated by small self-administered scheme funds, rather than imposing an inheritance tax regime that discourages investment.”

Estimates suggest there are about 50,000 small self-administered schemes in the UK, holding assets of around £50 billion.

And Paul says if those assets produced an average annual return of around six per cent, they could generate approximately £3 billion a year in investment income and capital growth.

He added: “Successive Governments encouraged entrepreneurs to build pension savings on the understanding that these assets would sit outside inheritance tax. 

“Many people have made decisions over decades on that basis.

“My message is simple: meet the people who operate these schemes, look at what is happening to investment decisions on the ground and consider an alternative before the Budget.”

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