Budget could see pension tax upheaval
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The Treasury is likely to announce a review of pension tax in next year’s Budget which could see higher-rate relief cut, Money Marketing understands.
Chancellor George Osborne had considered making the announcement in his autumn statement this week.
Treasury officials are looking at proposals, including cutting back higher-rate tax relief or capping the tax-free cash that can be taken as a lump sum at retirement.
People aged over 55 can take up to 25 per cent of their total pension fund tax-free. Tax relief on contributions is granted at the marginal rate up to an annual allowance of £50,000.
Cicero Consulting director Iain Anderson says: “The Budget is when we are likely to hear more about pension taxes. The Chancellor will not want to do more to squeeze basic-rate taxpayers.”
The Government has come under pressure from Labour on pension tax relief, with former Shadow pensions minister Rachel Reeves urging ministers to look at ways to make the system “more efficient, more effective and better value for the taxpayer”.
A Treasury spokesman says: “The Government is committed to providing clear incentives to save in a pension, up to generous allowances, and has no current plans to restrict tax relief on pension contributions or to cap relief on the tax-free lump sum.”
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Readers' comments (10)
Anonymous | 1 Dec 2011 12:08 pm
Sounds like yet more reasons NOT to save for retirement. Is HMG trying to kill off the pensiosn industry completely ?
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Dermot Brannigan | 1 Dec 2011 12:22 pm
I'd love to just be able to write anything I liked, without having to back it up with any factual proof whatsoever.
The only 'fact' in this story is a quote from a spokesman who denies there's any truth to this story.
I understand that David Beckham is contemplating a sex-change. Of course he and his wife have denied it, but I know he is seriously considering it.
I also know that Carlos Tevez is considering a return to Manchester.
Sorry, I think that last one has overstepped the mark somewhat
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Anonymous | 1 Dec 2011 12:31 pm
I thought they had already managed it! I have watched my pension fund fall from £54,000 to £34,000 and it is not getting any better. I am no longer funding it! Goes without saying really.
Do the powers that be want all OAP's to have to rely on the state, going into the future, because that in effect is what they are doing with their constant meddling and robbing of the pensions.
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Markco | 1 Dec 2011 1:36 pm
Anon @ 12.31pm. To be fair, the performance of your pension fund has nothing to do with HMRC taxation of pensions or restrictions on tax relief. If you have invested in assets where such fluctuation is not a tolerable risk, then the problem is that you have invested in funds which are not appropriate to your risk tolerance. The principle of benefiting from tax relief on pension contributions remains sound for the time being, but only you can ensure that the benefit is not then obliterated by investing the contributions inappropriately.
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blinkered | 1 Dec 2011 2:25 pm
shows how tactical and short term they have become...this road leads to company sponsors shying away from pensions...which leads to less emphasis...which leads to less saving...which leads to compulsion
it also leads to non-contributory schemes and tax-relief by the back door ie company contributions
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huw | 1 Dec 2011 2:44 pm
Why does every Govt we elect in this country appear to wish to destroy the place? Even pensions advisers have no confidence left in the products or the industry. If tax free cash is capped or removed there will be huge reduction in premiums paid in - maybe that's the plan? More taxable income to attack. Very worrying the Govt is reduced to this....
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Simon Mansell | 1 Dec 2011 5:57 pm
Higher-rate relief cut - that should be a boost to our pensions industry - add this to the 55% death tax and to hell with pensions!
Brown abolished dividend tax relief for pension funds. This single policy cost signaled the end of private sector final salary pensions (but not fat cat public sector final salary pensions which continue unabated & funded by the private sector).
If you want to save costs scrap the superannuation pension madness! Why should the private sector save for two pensions, our own and his, the public sector when he is perfectly capable of taking ownership and personal responsibility for his own pension?
Its time the Conservatives acted like Conservatives instead Crash Gordon, Mr Bean and that man with stary eyes!
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Anonymous | 2 Dec 2011 9:48 am
Problem - Public Sector pension liabilities now exceed £ 1 TRILLION
Answer - Lets clobber Private Pensions again!
Easy meat. All those stupid private sector workers, no unions, can't go on strike and the idiots will still vote conservative
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Keith Davidson | 2 Dec 2011 10:42 am
In the traditions of tabloid journalism if you keeping making predictions some of them will come true. Then your publication looks like it has some serious insight.
The Beckham story at 12.22 is a great scoop though.
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MrManc | 2 Dec 2011 1:19 pm
Last year I said "This is the third time i've seen this story in three years".
Well i can now say that this is the fourth time i've seen this story in four years.
I'll come back when and if it actually happens
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