This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+cover+small+180914
Categories:Politics,Regulation

Coalition set to debate pension tax relief cuts

  • Print
  • Comments (12)

Chief secretary to the Treasury Danny Alexander has reiterated the Liberal Democrats’ commitment to scrap or further restrict higher-rate pension tax relief.  

In an interview with The Daily Telegraph, Alexander suggests the Government cannot afford to continue with the levels of tax relief offered under the current system.

He says: “If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate.”

For those with “very large incomes who are paying very large pension contributions….. the country cannot afford to give you all the tax relief”.

A proposal to scrap higher-rate pension tax relief was included in the LibDem manifesto but did not make the coalition agreement.

Instead, the coalition Government announced new restrictions to higher rate relief such as a £50,000 annual allowance, introduced last April, and a reduction in the lifetime limit from £1.8m to £1.5m from this April.

Alexander told the Telegraph that scrapping higher-rate pension tax relief altogether would save the Government £7bn whilst scrapping it for those earning over £100,000 would save £3.6bn.

The coalition will meet this week to discuss tax plans ahead of the March 21 Budget and the Telegraph suggests Alexander will be pushing for those with incomes over £100,000 to have higher-rate relief cut.

Any such move is likely to face opposition from Chancellor George Osborne and Conservative backbenchers.

Alexander also told The Telegraph the LibDems would fight the next election with the commitment to raise the level at which income tax is paid to £12,500. It is current Government policy to look to increase the limit to £10,000. It will increase from £7,475 to £8,105 for the 2012/13 tax year.

Elsewhere, Treasury sources told The Sunday Telegraph that plans to introduce a tax break for married couples, included in the coalition agreement, would not feature in this year’s Budget.

The Telegraph also reports that the Government will consider a new tax avoidance crackdown which would allow HM Revenue & Customs to claw-back money saved from “’artificial’, but currently legal, tax dodges.”

The Sunday Times reports that Osborne is likely to push ahead with his plans to scrap child benefit for couples with at least one higher rate taxpayer with limited concessions for those earning just above the threshold.

  • Print
  • Comments (12)

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Taxbriefs Advantage
Advantage is a digital reference source giving unbiased, independent, answers to your technical queries. Subscribe to Taxbriefs Advantage.

Readers' comments (12)

  • This assumes that individuals dont start directing money towards EIS or VCT investments.

    Unsuitable or offensive? Report this comment

  • Fiddling whilst Rome burns!
    Higher rate relief might cost £7bn but the unsustainable Public Sector pensions are costing UK taxpayers £100s of billions! This is peanuts in comparison.
    Aren't our politicians looking in the wrong direction?
    Then again perhaps we can't expect turkeys to vote for Christmas.

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page

Have your sayEdit my profile/screen name

You must sign in to make a comment

Fund Data

Editor's Pick



Poll

Do you think the industry is ready to deliver Budget guidance?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments