Invest Lump Sum before possible loss of tax relief?

_pete_

Hi

I make monthly contributions to my pension fund. Part of my income is taxed at 40%, and my understanding is that I receive tax relief on my pension contributions. I believe that my pension provider tops up my contribution by 20% then I receive the remaining 20% as a reduction in my tax bill.

I understand that is is possible that the next government will end the 40% tax relief on pension contributions, and that they may do this with immediate effect. I'm therefore considering making a lump sum payment equivalent to a year's contributions in the next couple of weeks. I would continue to make my regular contributions as well.

Do any MSE contributors have any thoughts as to whether this is a wise course of action?

Thanks

Pete

CLAPTON

I think it most unlikely that the relief would be withdrawn part way through the tax year.
and as every payroll system would need to be updated and HMRC computer systems so it would take some time to plan and implement the changes

hugheskevi

Abolition of higher rate tax relief sounds easy, but is fiendishly difficult for some types of pension scheme, as has been demonstrated by the restricting of tax relief to those above £150,000.

If higher rate relief could be abolished even from April 2011, with or without significant administrative burdens, I'd be very impressed. I'd be amazed if it was abolished mid-way through a tax-year.