Major changes to pension legislation - affecting everyone!!

February 8, 2016 | posted in Industry Comment

Right now the rate of tax relief on all pension contributions mirrors the rate of tax we currently pay. So we get relief at 20%, 40% or 45%. The Treasury spends £34.3 billion a year and the majority of this is returned to higher earners.

 The Chancellor, George Osborne, is giving out a clear message that fundamental changes are imminent with the introduction of a flat rate relief on all pension contributions – this rate is predicted to be somewhere between 25% and 33%.

 When is it happening?

 Expected to be announced in the budget on 16th March 2016.

 Implementation

 Could take immediate effect.

 Who is affected?

 Everyone funding a pension and there will potentially be winners and losers depending on the rate of tax you pay.

 What should you do?

 Higher rate/top rate taxpayers – fill your boots! Consider maximising your pension contributions before the budget date to make the most of your tax reliefs.

Basic rate and non tax payers – Delay if possible until after the budget. 

To find out more please contact us – we look forward to hearing from you.