RSA: Set pension tax relief at 30% to help self-employed

A flat tax relief rate of 30 per cent should be introduced to help the self-employed and low to middle earners to save more for retirement, according to the Royal Society of Arts.

In a report published today, the RSA proposes rebalancing pensions tax relief away from higher earners to lower ones.

While its findings show many self-employed individuals are heading for hardship in old age, this outcome is far from inevitable and the self-employed are not destined to be destitute.

The report suggests giving individuals the right to continue contributing to a pension after leaving employment and the creation of a body to promote financial security for the self-employed.

It adds: “The problem is that our tax, welfare and regulatory systems have failed to keep pace with new ways of working.

“However, if through concerted effort and political courage, the measures recommended in this report are fully adopted, then self-employment would become less a lifestyle to fear and more a vocation to savour.”

Reacting to the report Hargreaves Lansdown head of policy Tom McPhail says: “The government has unfinished business with pension tax reform. The idea of moving to a flat rate is well-tested and would garner support in many quarters.

“However pension taxation is notoriously complicated and any move to reform the central pillar of the system would necessitate a more comprehensive review of the multitude of quirks and wrinkles which bedevil pension planning.”

The RSA has been doing a lot of work on self-employment and last July the body’s chief executive Matthew Taylor released a government-commissioned report into modern work practices.

It said the self-employed should receive the same benefits as those that are employed and made policy recommendations to achieve this.


deed of variation

Solving the self-employed pensions crisis

With no employer to fall back on, the self-employed are on their own when it comes to retirement saving. Irregular income patterns can make it harder to save regularly into a pension and commit to locking money away until age 55. Those who are building a business may see that as their biggest asset and […]


Govt still failing to address pensions for self-employed

The Government’s promise of “enhanced rights” for millions of UK workers does little to address the problem of pension provision for the self-employed, Steve Webb says. In its response to the Taylor report published today, the Government says “major reforms” will give millions of workers new rights and these “are a vital part” of the […]

2016 Global Survey of Individual Investors: How is investor behaviour rewriting the job description for financial professionals?

Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of […]


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. Am I missing something? Having the RSA looking into pensions ideas, seems about as daft as having the CII looking into the funding of the Arts in the UK..

  2. Royal Society of A***holes more like.

  3. tax relief on cash in hand – how does that work?

Leave a comment