40% Pension Tax Relief Abolished?

Perk to be withdrawn?

Over the years we have always been loath to scaremonger ahead of Budgets. But on this occasion we feel we ought to draw to your attention the risk that higher rate tax relief on pension contributions could be abolished in next week’s Budget (22nd April).

The Irish government is under similar pressure, and in their Budget on 7th April they introduced a number of unpopular measures, with more in the pipeline later in the year e.g. halving unemployment benefit for younger people, similarly for child care, and abolishing the Christmas bonus for welfare recipients.

If Gordon Brown is also going to have to introduce unpopular measures, it is difficult to see how higher rate tax relief on pension contributions can be sustained long-term.

We are suggesting that clients bring forward planned lump sum pension investment, ahead of the Budget – there is nothing to lose in doing this, and a significant chunk of tax relief can be locked-in.

Let us know as soon as possible if we can help.