Higher rate tax relief on pensions to be abolished?

[GreenerGrass]

Surely they wouldn't dare? On MSN articles keep cropping up where they talk about the government stopping higher rate relief - and if that happens you can bet the company contributions "loophole" for our "service companies" would be closed within a year afterwards.

http://pensions.money.uk.msn.com/msn...rticle/id/2772

The writers are always from Hargreaves Lansdown, obviously seeking to maximise contributions and make up for people's loss of faith in the stockmarket. I don't think it will ever happen, it would be a massive vote loser, kill the private pension and investment industry, damage the stockmarket and create huge resentment as the gap between public sector final salary pensions and private contribution-related schemes grows even bigger.

Rather than fear tactics H-L would be better marketing the idea that a 5-10 year recession/depression is a good time to accumulate (the right stuff) when prices are low.

[MPwannadecentincome]

Its on thisismoney too

[expat]

Surely they wouldn't dare? ...
I don't think it will ever happen, it would be a massive vote loser, kill the private pension and investment industry, damage the stockmarket and create huge resentment as the gap between public sector final salary pensions and private contribution-related schemes grows even bigger.

Like Brown's 1997 pension grab? Yeah, they wouldn't dare.

[Turion]

Problem is, Labour has got previous in screwing private pensions. The 1997 pension pillage which is bringing in over £5 bill a year. They still get plenty of flak for this. They might think it's a risk worth taking to get another 7bill from higher wage earners who mostly don't vote labour anyways.

[expat]

Problem is, Labour has got previous in screwing private pensions. The 1997 pension pillage which is bringing in over £5 bill a year. They still get plenty of flak for this. They might think it's a risk worth taking to get another 7bill from higher wage earners who mostly don't vote labour anyways.

Certainly, Brown needs funds more than ever. And as you say, losing all the votes of HRT payers who pay a lot into a pension will not be the worst that he could imagine.

[expat]

I cannot think of what I will do if this happens. Paying straight into a SIPP is the only worthwhile way for me to save money for my retirement (if any), when I am sure not to be paying HRT but not certain of having to pay BRT!

At my age, with current interest rates, an ISA is of no interest. What use is it to bill £1000, pay ERs and then £887 salary, get £523 net salary, put it in an ISA, and over 10 years at 4% have it rise (tax free!) to perhaps £784, which will be taxed BRT on payout so effectively worth £628?

With company contributions to a SIPP, in goes £1000, it may rise over 10 years to £1500, then be taxed BRT so worth net £1200. (Inflation apart).


It makes all the difference to me that in my impoverished retirement I pay only the tax on my then income, not on what my contracting income was years before. This is the only way I can think of to do it, apart from these other more imaginative plans:

A. Take part of my retirement every year: if I work less and bring my income below HRT threshold, I'll have to work longer but I will get the tax break.

B. Don't save anything.

[ASB]

If they do do this (and I think it is quite likely) then this will surely just encourage people to move into salary sacrifice for all or part of their contributions.

I imagine therefore there will also be some considerable tinkering for the rules in this area - perhaps disallowing CT relief. Likey to be yet more admin burden and presumably the tinkering would amount to be a neutral measure which somehow accidentally raises another few billion in CT.

[Cyberman]

It will just deter even more people from investing in pensions and thus the stock market, but it could be good for the housing market at it makes property even more attractive. Bring it on I say !!

[AtW]

They'll go for it without doubt and justify it as tax on the "rich" like that banker from RBS.

[expat]

If they do do this (and I think it is quite likely) then this will surely just encourage people to move into salary sacrifice for all or part of their contributions.

I imagine therefore there will also be some considerable tinkering for the rules in this area - perhaps disallowing CT relief. Likey to be yet more admin burden and presumably the tinkering would amount to be a neutral measure which somehow accidentally raises another few billion in CT.

Absolutely. Probably making the individual who receives the company pension contribution (whether by sacrifice or not) responsible for a tax top-up on his SA, in the same way as now a HRT individual pensions investor reclaims the difference between HRT and BRT on the SA return.