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.
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.