Perk for the rich to be withdrawn?
Over the years we have always been loath to scaremonger ahead of Budgets. But on this occasion we feel we ought to draw to your attention the risk that higher rate tax relief on pension contributions could be abolished in next weeks Budget (22nd April).
There is no doubt that the Government, and it’s finances, are under huge pressure. Among other things the Government will have to set the right tone next week to appease those it expects to buy the huge upcoming issuances of gilts.
The Irish government is under similar pressure, and in their Budget on 7th April they introduced a number of unpopular measures, with more in the pipeline later in the year e.g. halving unemployment benefit for younger people, similarly for child care, and abolishing the Christmas bonus for welfare recipients.
If Gordon Brown is also going to have to introduce unpopular measures (if he doesn’t do it next week he is simply putting off the day), it is difficult to see how higher rate tax relief on pension contributions (a perk for the rich?) can be sustained.
We are suggesting that clients consider bringing forward planned regular and/or lump sum contributions, and make them ahead of the Budget – there is nothing to lose in doing this, and a significant chunk of tax relief can be locked-in.
Let us know as soon as possible if we can help.
