View more on these topics

Treasury tipped to cut pension tax relief to fund NHS spending

Chancellor Philip Hammond is expected to announce cuts in the Budget to pensions tax relief to help fund the NHS.

The Telegraph reports a senior Treasury source has confirmed tax free contributions will be stripped back to unlock the extra cash for healthcare.

In June the government promised to spend an extra £20bn annually on the NHS by 2023 and, in July, reports surfaced the government was considering how this could be done.

It is understood the Treasury started to investigate the flat-rate proposal that says a single rate could raise an additional £4bn in revenues.

Tax relief is currently assigned in line with a person’s marginal rate of income tax, which distributes relief towards higher earners and costs the government around £40bn a year.

A flat rate of 28 per cent has been proposed by the Resolution Foundation to help millennials save for later life and the Royal Society of Arts has suggested a 30 per cent rate to help the self-employed.

Royal London policy director Steve Webb says reform of tax relief is more likely to happen this year as the government faces more spending pressures and alternative sources of taxation are not available.

This includes fuel duty and changing national insurance contributions for the self-employed which the government reversed course on in September.

Webb adds any reform of tax relief, if it does occur, will not be a radical move to a single rate but involve more conservative tinkering to the annual allowance and lifetime allowance.

Cicero Group executive chairman Iain Anderson says: “The folder on scrapping higher rate relief has been in the chancellor’s in-tray since he arrived in the Treasury. So all the economic analysis has already been done.

“It remains an attractive option for a chancellor looking to make a bold commitment towards public spending and it would play well to the prime minister’s mantra of a country that works for everyone. The idea to create a single flat rate relief for all is the most widely talked about.”

The Treasury declined to comment.


Treasury U-turns on NICs cut over fairness concerns

The Treasury has shelved plans to cut national insurance contributions for the self-employed amid concerns it would be unfair on low earners. Class 2 NICs were set to be abolished in April, but the policy was delayed for 12 months. National insurance contributions are set aside by the Treasury to help pay for the state […]


Annual allowance tax take take triples in year after taper

The amount savers have contributed above the annual allowance on pensions has more than tripled in the last year. Figures released this morning by HM Revenue and Customs show that for the 2015/16 tax year, total annual allowance breaches came in at £179m. This has now jumped to £561m in 2016/17, the year the tapered […]

client financial data

Are advisers doing enough to keep client data secure?

Nearly six months on from the introduction of strict GDPR rules, IFA firms are under increasing pressure to prevent costly security breaches Experts are questioning whether advisers are doing enough to safeguard client information as the market approaches the six-month anniversary of GDPR. While the financial advice sector has seen advances, particularly in platform and […]

Investment Clock Strategy Update

In his latest Investment Clock report Trevor Greetham, Head of Multi Asset at Royal London Asset Management, explains why he is ‘ready to buy dips’. Read the report here: The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back […]


News and expert analysis straight to your inbox

Sign up


There are 5 comments at the moment, we would love to hear your opinion too.

  1. So instead of using the obvious sources to fund this proposal (e.g the current contributions to the EU or Foreign aid), spreadsheet Phil instead chooses to much about with pensions yet again.

    Then the politicians have the audacity to wonder why people don’t engage with saving for their retirements…..

  2. Tax relief is a target – no doubt about it. Speculation will continue right up to Budget day.

    But when would these changes be implemented? At midnight on Budget day? 6th April 2019? 6th April 2020?
    Would a deadline create a mad rush for Employers, Financial Advisers and Accountants to take action?

  3. And of course let’s not forget that the Politicians are all “I’m alright Jack” with their final salary schemes and 20 year moratorium on no more changes to it, so they can all retire happily ever after!!

  4. The credibility of any source that mentions “tax-free contributions” is questionable. They are largely tax-deferred, not tax-free. Part of the reason the suggestion makes little sense. Now on the other hand, if he were to reform tax & national insurance policy to streamline in a way that might raise extra revenue, that would not be so difficult to square.

  5. not sure how this will help the 4.2 million self employed of which the ONS classifies 49% as low paid and who are unlikely to be able to afford to contribute irrespective of tax relief changes

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm