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MSE Poll: Should pension tax relief be halved to 20% for higher earners?

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Poll started 17 October 2017
Should pension tax relief be halved to 20% for higher earners?
Pensions are a powerful tax break – allowing and encouraging people to save for retirement from PRE-TAX salary – at a cost to the Treasury of an estimated £35bn/yr. In simple terms…
For each £100 saved it only costs a…
- Basic 20% rate taxpayer (salaries c. £11,500+) £80 from their pay packet
- Higher 40% rate taxpayer (salaries c. £45,000+) £60 from their pay packet
- Top 45% rate taxpayer (salaries c. £150,000+) £55 from their pay packet
Some argue this is fair as everyone simply saves on paying income tax, others say higher earners do better as their tax gain is at least double. One idea mooted for the Autumn Budget is everyone just gets a 20% tax break, ie, a cut for higher earners, and a saving to the Treasury of over £10bn/yr.
Do you think pension tax relief should be cut for higher rate taxpayers?
Did you vote? Are you surprised at the results so far? Have your say below. To see the results from last time, click here.
If you haven’t already, join the forum to reply.
Thanks!

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Replies
No. Previous governments have butchered the State pension system with the result that for any kind of pension -including any certainty as to when you might actually receive it- you are now all advised to get your own.
So no. This idea of DIY pensions still hasn't taken off yet - vis the TV commercials of everyone ignoring the Pension thing, and to start taking it apart before it's taken hold surely spells doom.
I have no problem with higher rate tax-payers getting a better deal - when they come to draw pension they will surely pay tax on it still, besides never living long enough to spend the pot. Meantime, their pension savings are surely the only investment money powering the economy.
I'd leave things as they are. I'd like to draw a line in the sand in that the govt of the day can (and did) mess around all they like with the State Pension, but not with the DIY pensions. But I think pension tax relief will eventually go the way of mortgage interest tax relief.
And if they do change it, it will be political suicide for the Tory party.
Words, words, they're all we have to go by!.
(Pity they are mangled by this autocorrect!)
I would be a 40% tax payer if I didn't fund my pension. Because I do my income drops below the 40% threshold and I pay 20%. How would 20% relief work?
e.g. Salary £50k, Pension £10k, Taxable £40k - £11.5k Personal allowance = £5.7k Tax
A pension is simply deferred salary - if you want to part tax it on the way in, you should part tax on the way out as well, and have destroyed the basic premise of pensions in the process.
Sounds like it could introduce another tax cliff-edge* like married couples allowance, removal of child benefit, and withdrawal of personal allowance.
* e.g. someone using married couples allowance earning £45,001 owns £230 more tax than someone earning £45,000 i.e. has to pay 23,000% on the last £1 earned (known as the "marginal rate").
You may be thinking of Top rate payers (currently 45%). Higher refers to 40% tax-payers and so starts at £45k this tax year, well below the personal allowance cliff-edge.
It isn't an additional 2% National Insurance (unless you mean the historic SERPS change). NICs drop from 12% to 2% for income above 45k for employed people.
I entirely agree about high marginal rates.
It makes as much sense as moving tax relief for basic rate taxpayers to below the personal allowance (i.e. 0% relief). Most people would agree this is illogical.