Pension relief set to be reduced!
With all possible avenues of tax planning being blocked, one of the only way to legitimately reduce your tax bill is to save for your pension. It is vanilla planning!
However, it is highly likely that Mr Osborne will reduce the availability of higher and additional tax relief. It is possible that only basic rate will be available and there are noises that tax relief for pensions could be withdrawn completely.
If these measures are implemented Gordon Brown's raid on pensions will be seen as a walk in the park!
Mr Osborne has already indicated that tax reliefs on pension contributions could be subject to further change. The details were originally expected in the Autumn Statement, but he recently told savers not to expect a decision until the Budget next March. As high earners get the lion’s share of the tax relief, it is thought that higher-rate and additional-rate (40pc and 45pc) taxpayers could soon lose their generous tax perks on pensions. This doesn’t preclude some form of interim announcement in the Autumn Statement and given their sensitivity to the risks of a ‘buy-now-while-stocks-last’ from higher earners scooping up pension tax relief, it is just possible the Treasury will act in the short term to curb this. ”