The Chancellor may reduce the maximum pension contribution eligible for tax relief from £225,000 to £100,000, according to Budget predictions from chartered accountants MacIntyre Hudson.
The firm says Alistair Darling may see the current level as having the potential for higher-earners to abuse the system and could cut back the annual limit on tax relief.
Tax principal Patrick King says: “The Chancellor can argue that nobody making contributions at that level is likely to end up on state benefits in retirement and so a lower limit would protect the state’s interests while minimising opposition, at least from traditional Labour voters.”
The firm also believes Darling could raise the rate of National Insurance contributions above the upper earnings limit from 1 per cent to 2 per cent.It says he may introduce higher supplementary rates for top earners, such as a 3 per cent charge on earnings above £100,000.
MacIntyre Hudson tax principal Nigel May says: “The chief attraction of this move is that it would only affect higher-earners so would not ruffle the feathers of core Labour voters.”
May also attacks Darling’s non-dom proposals. He says: “The Chancellor probably now realises that his hasty non-dom policy is a disaster in the making, which will cost revenue rather than raise it but, fearing that this would be one climb down too many, is likely to plough on regardless.”Best service provider Legal & GeneralMost improved provider AxaBest critical-illness insurance provider BupaBest income protection provider PioneerBest new initiative(in association with Defaqto) AxaBest underwriting team AxaBest individual impact Naomi Greatorex (Axa)
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