The Liberal Democrats would consider a flat rate of pension tax relief if elected.
In the party’s manifesto today, alongside a commitment to protect the state pension triple lock for the next parliament, the Liberal Democrats said they would launch a pension tax review to look at how a flat rate might work.
The manifesto says: “We want Britain to be the best place in the world to save for, and enjoy, your retirement. We will…establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be designed to be simpler and fairer and would be set more generously than the current 20 per cent basic rate relief.”
Pensions in the higher rate tax band will no longer be entitled to a winter fuel payment under Liberal Democrat plans, but all pensioners will keep their free bus passes.
AJ Bell senior analyst Tom Selby says: “If there is to be reform to pension tax relief, it should be done in a measured way and agreed cross-party. An independent review of pension tax incentives would help foster this consensus, and all parties should commit to not tinkering with the system once any changes have been introduced. The last thing we want is huge reform programme to be introduced by one Government, only to be torn apart by its successor.”