Tax relief on pensions (150K plus)

BobQ

I note that the Tories have now said that they will reduce tax relief on pensions for those earning over £150K (as have Labour)

The Tories will use it to raise £1bn to subsidise IHT relief

http://www.bbc.co.uk/news/election-2015-32271505

Good_bad_and_ugly

If you're on 150k, you'll probably be over the lifetime allowance in a heartbeat anyway. Don't forget, there are many reasons why paying into a pension 'gross' (ie; without tax relief) can be worth it.

madeinireland_2

What would those reasons be ?

EdSwippet

IFS commentary:

http://www.ifs.org.uk/publications/7708

"... the undesirable distortions to savings behaviour and to work incentives have the potential to be significant. ... There is a danger that the tax proposals being put forward through this general election campaign will have a long term malign influence on our tax system and economic welfare."

Good_bad_and_ugly

madeinireland wrote: »

What would those reasons be ?

To move wealth outside your estate for IHT purposes (IHT409 refers). If you are very ill when making contributions or die within a couple of years though, be careful.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373581/IHT409.pdf

jamesd

Last year was the highest year for VCT money inflow since tax relief on it was cut. Looks as though both of those parties are planning a boost for the VCT industry.

Good_bad_and_ugly

Agreed.. and SEIS/EIS.

kidmugsy

BobQ wrote: »

I note that the Tories have now said that they will reduce tax relief on pensions for those earning over £150K (as have Labour)

If Mr Balls gave a maniacal cackle and said he'd kill all the first-born, would Mr Osborne adopt the same policy?

BobQ

kidmugsy wrote: »

If Mr Balls gave a maniacal cackle and said he'd kill all the first-born, would Mr Osborne adopt the same policy?

It might attract less critics!

"Damaging and malign", uniting the IFS, HL and ABI plus unnamed experts.

http://www.telegraph.co.uk/finance/economics/11531391/Pension-tax-relief-plans-damaging-and-malign-experts-warn.html

Pete111

Anyone know how this will work?

Sounds like both Labour and the Tories are lining up to restrict pensions tax benefits for those earning over 150k.

I'm lucky enough to be in this bracket and already had plans to keep my taxable income to 150k if possible - via salary sacrifice, charitable giving and of course additional pension payments. I'm assuming that the 150k mark mentioned is only taxable income - ieif I pile additional pension funds in (up to the 40k maximum) then these monies won't be counted. Anyone kbnow if that is correct?

If we are looking at some form of cliff edge (ie by earning £1 over 150k means I scupper all of my pension contributions rebates then it's a big incentive not to earn too much!!

green_man

Yes the devil will be in the detail.

I Assume that they will restrict max rebate to 40% thus no addition advantage for those above 150K. It would be nonsensical to have a cliff edge whereby all relief was lost as this would simply result in these people putting nothing into a pension.