Will pension tax relief be cut in the Autumn Budget? - what you can do

The Chancellor has recently announced that the Autumn Budget will be on Monday 29th October, and it is more likely than ever that there will be changes to the current (generous) rules on pension tax relief.

Why changes to pension tax relief are likely

There are a number of factors which support the suggestion of budget changes to pensions tax relief, including :

• NHS funding - many people think that a reduction to pension tax relief for higher earners will be a way to help fund the additional £20 billion for the NHS recently announced by Theresa May, rather than an increase in Income Tax.
• Rising costs - the annual cost of pension tax relief is rising (current estimate £41 billion for 2018) and this is likely to continue due to pension auto enrolment, increases to minimum contributions and extension to 18 year olds.
• Call for change - a recent report by the Treasury Select Committee suggested a fundamental reform of the system, either by reducing the £40,000 annual allowance or moving to a flat rate of tax relief.
• New flat rate - many believe that the latter of these 2 options will be the next step, most likely a flat rate around 30%. This would mainly affect the top 10% of taxpayers and differs from the current system which gives tax relief in line with the amount of Income Tax that you pay.

Worried about budget changes to tax relief?

If you are worried that a change in pension tax relief may affect you, you may wish to consider making the most of the current rules – especially if you are a higher earner.

If you have enough earnings, you may also be able to make extra pension contributions via carry forward by carrying over any unused annual allowance from the last 3 tax years after you have used this year’s allowance.

Free pension, finance and investments review

We recommend our clients to Tilney, one of the UK’s leading private client investment and wealth management company who provide top quality, solid and practical pensions advice.

To discuss budget changes to pensions tax relief and how they may affect you, why not book a no obligation review? To do this simply call Charles Coade on 0113 224 5544 or email charles.coade@tilney.co.uk or contact Charles via our Leeds office as below.