Pension tax relief for high earners

How will the second Budget of the year affect pension tax relief for high earners?   The second Budget of the year is scheduled for 8 July, with the Chancellor George Osbourne wishing to waste no time in implementing the Conservative’s pre-election Manifesto.  The fact that the Conservatives were able to gain a majority provides them with a greater freedom to implement their austerity measures.

Although the new ‘pension freedoms’ and easing of pension death benefit taxation have been welcomed, it is perhaps likely that the Chancellor will scale back the potential benefits of pension funds for those who are deemed ‘high earners’.

The Conservative’s pre-election Manifesto, for instance, pledged to reduce the Annual Allowance (the amount that an individual could pay, or have paid on their behalf, in to a pension plan on an annual basis) would be reduced for those earning more than £150,000 per annum.

The other main political parties had their own proposals to reduce the potential benefit of pensions to higher earners.

It is unknown whether the Conservatives will stay rigid to their pre-election Manifesto with regards to pension tax relief, or indeed make amendments, until 8^th July. We would therefore suggest that any individual wishing to make large pension contributions (whether personally or a business paying these on the individual’s behalf) should consider doing so as soon as possible.

The only thing that we can be sure of is that this matter has been a ‘hot topic’ and is likely to be in the line of fire in the next Budget.  Please contact us should you wish to discuss this matter further, or require advice on this or any other financial matter.