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Brown makes pension tax relief gaffe in TV debate

The Labour Party has admitted that Prime Minister Gordon Brown made a gaffe when he said that he would cut pensions tax relief for those earning over £100,000 in the leaders’ debate yesterday.

The slip-up appeared to mark a change of policy for the Labour Party, which has only previously said it would cut pensions tax relief for those earning over £130,000 from April 2011, however a party spokeswoman has confirmed that Brown made a mistake and that the stated policy in the Labour manifesto still stands.

Many in the industry expressed concern after the initial Budget tax relief announcement last year that Labour would look to catch more earners with restrictions further down the line.

Speaking in the debate on the BBC yesterday, Brown said: “Our four-year deficit reduction plans include a rise in the top rate of tax above £100,000, taking away pension tax reliefs for those above £100,000 at a higher rate and a National Insurance rise.”

Hargreaves Landsdown head of pensions research Tom McPhail says: “You could take this one of two ways – you could argue it was an innocent mistake or he may have even mixed up the personal tax allowance limit.

“Or it may be that the gaffe happened because conversations have been taking place and it is on his mind. He does have form when it comes to pension tax hikes.”

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Comments

There are 38 comments at the moment, we would love to hear your opinion too.

  1. Another simple admission that they got it wrong, first it was £150,000, then £130,000, now £100,000, next month £70,000? Desperate electioneering. Good job we don’t have to worry about about Labour staying in power

  2. And yet his own enormous pension continues accumulating at a rate that would be well above the Lifetime Allowance were he in the public sector

  3. Robin Hood Robin Hood riding through the glen, Robin Hood Robin Hood with his band of men, robs from the succesful to support the lazyyyyy, Robin Hood Robin Hood Robin Hood!!!!!!!

    When are going to lose this socialist claptrap that will drive the talent and skills abroad??

  4. “Many in the industry expressed concern after the initial Budget tax relief announcement last year that Labour would look to catch more earners with restrictions further down the line”

    Many others in the industry welcome this news.

    The vast majority of this country are not contributing to any form of savings surely a more radical approach would be to give 100% tax relief until a fund reaches a certain size, then reduce the relief to 80% and so on until it tapers away.

    I am sick of reading these very biased news stories.

  5. One presumes this will not apply or reduce his own Final Salary pension.Or am I being a bit bigoted

  6. John C – you sound like a lovely person. If by talent you mean greedy folk unwilling to contribute to society at a reasonable rate then good riddance.

  7. I totally agree with these points, I have no faith in Brown due to the fact that everytime this issue is raised, the threshold for tax relief being cut for pensions continues to decrease. Soon, he’ll be matching Clegg’s proposal to target all those above basic tax rate!!!! Totally ridiculous and unjust!

  8. Ive never commented on here before but I couldnt agree with you more John. Clegg will do exactly the same – he wants to make the high earner/hard workers poorer and leave the lazy to carry on sponging.

    I know what we’ll do – we’ll take those people who are already keeping this country afloat and get them to pay even more in and leave those that are taking out to carry on doing just that !!

  9. “John C – you sound like a lovely person. If by talent you mean greedy folk unwilling to contribute to society at a reasonable rate then good riddance”

    thank you Paul, I am a lovely person. I earn nowhere near what this guys earn, however, they still pay income tax and all the other taxes as we pay as we earn in this country. I dont necessarily agree with how much they pay but they are massively in demand as most of the western economies are funded by their “City” and to keep them funding us they need to be here! Therefore they do pay into society by a shed load more than I do, just because of their pay!

  10. Sorry but I have never understood the need to give higher rate relief to anyone. What is the point of taxing someone at 40% or 50% and then giving them some of it back ? To all you Tory IFAs just be thankful I’m not the Prime minister or chancellor

  11. Paul all I can say is what a crock…reasonable rate are you on a different planet. Successful people aren’t successful by luck they contibute to society by working hard, producing income for HMRC in the form of paye tax, employee NI contributions, employer NI contributions, vat collection employing staff and giving them the opportunity to buy things from other companies giving those employers the benefit of collecting tax for hmrc so that the government can give away money to spongers who do not want to work, to people who have children with the only purpose of getting free housing and a hand out. An unreasonable contribution determined by idiots who are not fit to run a business but fit enough to ruin a country. Did you notice that you are the only person not to agree. Democracy!

  12. I disagree with John Blackmore. If you’re going to tax people at 40% then why should they be denied the same rate of relief on pension contributions?

    To do so demonstrates prejudice against the financially more successful people in our society.

  13. If the high earners didn’t get tax relief they wouldn’t contribute to pensions. The life companies would not make as much profit and not be able to create innovative products for the industry to sell (sorry advise). High earners contribute massively to society and to the public coffers. You do sound like a nice bloke but it is a good job you aren’t prime minister or chancellor of the Merry men!!!!!!!!!

  14. John Blackmore lets make it simple for you. If you pay income tax at 40% or 50% and take the socially responsible step to defer some of your pay to later life instead of sponging off tax-payers in retirement, why shouldn’t you receive full tax relief?

    Restricting tax relief will prove to be hugely counter productive.

    Why should a company owner establish a pension scheme for his employees when he himself will not benefit tax wise in full from his pension contributions?

    These are the politics of envy.

    Talented people who are prepared to take a risk, deserve tax breaks on an even keel with less wealthy individuals.

    If you don’t agree with this take a boat to North Korea!

  15. You must be joking 30th April 2010 at 12:54 pm

    Infact GB didn’t actually say, he WOULD cut tax relief for those earning £100k+ he actually said this was already the proposal…

    Could be s slip of the tongue…

    Could show he really hasn’t a clue what he is on about…

    Could be that this is the plan…

    As far as why give higher rate relief? Well that’s obvious, give u shigh earners the incentive to tie money up into an inflexible investment vehicle, whereby HMRC can dictate what we can and can’t do!

    With out that incentive, why would we bother – we may as well join all the other parasitic spongers who make the UK such a great economic power!

  16. I don’t understand the likes of John Blackmore’s comments which seem to be based on one of envy. If you are not a higher rate tax payer why not aspire to be one? Oh I forgot, we need envy to justify the socialist cause. If these HRTax people, contribute the amount of tax they do to the country, why should they not get higher rate relief on their pension conributions? If you deny HRTax payers HR relief, why offer basic rate tax payers basic rate relief? Take this to its ulimate conclusion and soon there won’t be any tax relief on pension contributions at all. Maybe that’s the cunning socialist plan!! Good to see they won’t likely get the chance to put it into practice.

  17. Tax and pension tax relief should be made more straightforward.

    Higher earning people pay more tax.

    Tax relief on pensions should be fair and simple. Relief should be provided at the highest marginal rate incurred.

    I agree with the 50% income tax rate for very high earners.

    I do not agree with the stealth taxes removing personal allowances where income is in excess of £100k pa. Are these individuals not entitled to personal allowances. If more tax receipts are required, why not change the tax rate to 41% or 42% rather than overcomplicate matters.

    Brown bumbles along…..

  18. Microphone on… microphone off. Camera on… camera off. Policy made up as you go… or exposed as really intented.

    If anyone including you John B’ are stupid enough to still believe Brown is actually capable of getting us out of this mess – a mess that his policies significantly contributed to (both as Chancellor and Prime Minister) then you really are deluded. 13 years in power, a massive majority driving thru all manner of socialist b-s, and the result – debt, debt and more debt!

    We need change, and importantly change that isn’t (as John C above said) driven by socialist claptrap. We need to encourage private enterprise and the job creators to generate economic growth, including top paid entreprenuers to say in Britain and help create growth which in turn creates tax revenues.

    The problem with socialist in power is they pretend they are representative of the people, but in truth are no better than those that they are critical of. Brown, just like his former deputy (2 jags Prescott) has his nose in the snout… “do as I say, not as I do”… with massive pension and retirement benefits to boot!

    If you don’t understand the concept of higher rate allowances – try living in Sweden, France, Turkey or Poland… full of socials spanking top earners!

  19. Colin Tomlinson 30th April 2010 at 2:50 pm

    One band 30% on the first £5000 to a defined contribution scheme

    Maybe just maybe it would give sufficient impetus to those on low earnings to make sufficient provision and discourage the wealthy from making excessive contributions.

  20. It won’t be long and we will all be thankful that G Brown is not the Prime Minister or Chancellor too.

  21. Fraser Brydon - IFA 30th April 2010 at 3:04 pm

    is it me or are we still bashing high earners, why should they not receive tax relief at their highest marginal rate, it’s not on their total earnings, only what they want to save for their retirement, pruchase the business premises they work from, enrich their employees working enviroment, not wring as much as they can from the system or be a net taker as most of the critics seems to label them….lay off and focus on the good it does, incentivise and reward, it’s not difficult!

  22. John Blackmore – comments page 1 –

    You have my vote. Such a relief when sensible, logical people make their voice heard.

  23. How about keeping a note of what proportion of pension funding received higher rate relief and taxing the eventual pension from that tranche accordingly. No more higher rate relief in, basic rate tax out.

    Or why not just have a flat rate tax and get rid of the need for tax planning by totally simplifying the tax system?

    Why not?

    Because accountants and the financial services industry have too much vested interest.

  24. Another Gaffe. Rather prone to this seems our Prime Minister(not elected). Does he not think with his brain before he engages mouth, or is this his roundabout way of letting us know what he is going to do rather than putting it in his election manifesto which he knows then would sink the labour party. Its rather strange that some of your contributors also think that
    those who work hard and earn a good living should be taxed to the hilt to support those who cannot get of their rear ends to earn a living. I am not talking about those who genuinely need help or are unfortunate not to be able to work, but the billions of pounds that the government admit are being paid to the workshy and they are doing nothing to combat it except the odd case you read in the press.

  25. Gordon Brown is as daft as a brush. No only does he call one of his own supporters a bigot, he does not know what his own party policies are! God help us if he gets in.

  26. It’s high time higher rate tax relief was stopped completely.

    A much fairer solution would be to raise basic rate tax relief for EVERYONE rather than t waste valuable resources on those who really dont need any further encouragement to save.

    John, can I come and wave you off?

  27. Steve Robertshaw 30th April 2010 at 3:15 pm

    The Government, the Lib Dems and John Blackmore fail to understand that pensions are tax deferred. Whatever you contribute to your pension now, you get your income tax back. When you retire, you pay tax on the income produced. Tax deferred.

    If you remove higher rate tax relief on contributions, a higher rate taxpayer will have pay the difference (20%) to contribute to their pension. If they are a higher rate tax payer in retirement, they will have to pay tax on the same income again.

    Removing higher rate tax relief will kill the pension industry. Those that can afford large contributions will not wish to be taxed twice. At the other end, means testing makes you no better off if you accumulate a smaller pension fund as those who didn’t save will receive greater state support.

  28. Can someone explain to me why a person who has given up 6 years of their life to achieve greater career success,has to pay higher tax rates than a person who leaves school at 16 with no qualifications (and in lots of cases has to settle for a lower paid career) is a fair system of taxation.The notion of earning more money means you can afford it therefore you can pay more, is not a fair system of taxation. It is ok according to Labour, to allow the well off to pay back our countries mountain of debt.

  29. Something else he said was ‘If your house is worth less than £650,000 then you won’t pay inheritance tax’. If only it were that simple!

  30. Firstly – can we stop making an automatic assumption that Brown won’t be returned to power. This might yet be closer than we think. No, I can’t believe it either. How can a nation be bought to the brink of financial ruin, yet the Destroyer-in-Chief have anything more than single figure popularity. Beats me – but he has.

    On tax relief, here’s why HR relief is less important. Relief encourages pension contributions. That’s positive news because it helps reduce the number of people reliant on additional State support in retirement. Those who are HRT-payers will typically have accumulated sufficient wealth and enjoyed a standard of living such as to preclude the likelihood of them saving so little that, at retirement, they would subject themselves to later-life penury. So they will already take care of provision to an ‘appropriate’ level.

    If we believe that abolishing HRT relief will mean HRT-payers will suddenly abandon retirement planning, then we have a dim view of the intellect of our wealthiest citizens

  31. Incompetent Regulators Awards Team 30th April 2010 at 4:26 pm

    This is all about eh politics of jealousy from the PC Lefties who actually live a more right wing life that real honest right wingers.

    Also these MPs are so stupid they don’t seem to understand the m,essage they are sending otu to society, DON’T SAVE!!!

    Also for the ignorant – long term savings helps boost the stock market confidence, help companies cash flow, research and development etc etc. ………………….. politicians are soooooo STUPID.

  32. There is no justice or morality in politices, Socialist M.P.s cry for the poor of the world while dwelling in many houses funded by the public purse. Their pensions provide riches out of the reach of most, while their expenses are fraudulent, yet they scorn success and wealth and scream the social injustice of the working class man.

    The socalist idea of success is to squander the
    nations wealth, as have every labour government since the 1950’s.

    In America success is rewarded, in the uk it is scorded.

    No wonder so few people vote.

  33. couldn’t agree more Paul D, glad someone got round to saying it plainly

  34. If it was a “gaffe” then he’s just repeated it to Jeremy Paxman in his interview on BBC1

  35. Sorry John Blackmore, you really should stick to giving imnvestment advice and not to saving for one’s retirement.
    I will repeat what Steve Robertshaw said at 30 Apr 2010 3:15 pm. The poster who then followed made a good point to about why should a graduate pay more tax than someone who leaves school at 16?

    The Government, the Lib Dems and John Blackmore fail to understand that pensions are tax deferred. Whatever you contribute to your pension now, you get your income tax back. When you retire, you pay tax on the income produced. Tax deferred.

    If you remove higher rate tax relief on contributions, a higher rate taxpayer will pay the difference (20%) to contribute to their pension. If they are a higher rate tax payer in retirement, they will have to pay tax on the same income AGAIN.

    Removing higher rate tax relief will kill the pension industry. Those that can afford large contributions will not wish to be taxed twice. At the other end, means testing makes you no better off if you accumulate a smaller pension fund as those who didn’t save will receive greater state support.

  36. Couple of things here :

    One it’s no certainty that the Conservatives get in

    In the event of a hung parliament Gordon Brown gets the 1st shot at making an alliance.

    Secondly we need to simply taxation, in the pension space and in other areas……because that would simply make life easier.

    Only those who understand the value of saving ( pensions included ) do it.

  37. Can someone please tell me what is ‘fair’ about taxing higher earners at a higher rate?

    Surely a fair society would have a standardised rate of tax across the board – maybe I a missing the point?

  38. @John Cowan

    Do you mean the socialist claptrap embodied by things like the NHS?

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