14th July 2016
Pension experts are worried that changes or cuts to pension tax relief will be back on the table for the new Chancellor of the Exchequer Philip Hammond.
Jelf head of Benefits Strategy Steve Herbert says a likely downturn in the economy will leave the Treasury looking for revenue at a time when there is also pressure to abandon some of the harsher aspects of austerity.
The issue of higher rate tax relief has been on the political agenda for several years with suggestions that it could be abolished altogether for basic, higher and additional rate tax payers before the last budget or that it would at least be equalised at a lower level.
Herbert says: “The pensions taxation issue was always likely to be back on the table post referendum anyway, but given the likely economic slowdown as a result of a Brexit decision I would imagine this Treasury cost will be under early review by Philip Hammond is his new role.
“Added to this we have the new PM’s overt statements about not favouring “the privileged few” in her first speech on Wednesday. This rhetoric may add fuel to the likelihood of a withdrawal of higher-rate tax reliefs within pension schemes. It will be interesting to see if any savings associated with this are redirected towards encouraging savings for the many, or are instead used for other spending options We will be watching this develop with interest.”