Removal of 40% Tax relief

RD42

Hi All,

Is anyone considering paying in larger sums than normal into their pension to make the most of 40% tax relief, assuming that it may be reduced / abolished in the next budget?

Thanks!

bowlhead99

RD42 wrote: »

Hi All,

Is anyone considering paying in larger sums than normal into their pension to make the most of 40% tax relief, assuming that it may be reduced / abolished in the next budget?

Thanks!

This question has come up every year since 40% tax relief was available.
The answer is generally no.

Malthusian

If you have the money and the allowance available, I see no reason not to make hay while the sun shines.

That said, the Budget will be in November and any cut to pension tax relief will almost with 100% certainty take effect in April 2018, so you will lose nothing by waiting to see what the Budget actually says.

RD42

Thanks - immediate effect or not was my biggest concern.

michaels

How would this work with DB and Sal Sac?

I would have thought 40k to 30k would be more likely. This would be a nightmare for me and may require me to completely rejig my income, working hours and retirement date requiring 2 years more work

Triumph13

bowlhead99 wrote: »

This question has come up every year since 40% tax relief was available.
The answer is generally no.

I was very miffed that I fell for this one in March 2016 and bunged a fair bit into a personal pension as I didn't have time to change my salary sacrifice before the budget. The 20% increase in value since then has softened the blow somewhat though!

Paul_Herring

Is anyone considering paying in larger sums than normal into their pension to make the most of 40% tax relief,

I decided that 10 years ago (to drop my salary below the 40% band.) Still doing it.

assuming that it may be reduced / abolished in the next budget?

That wasn't the reason I did it though.

kidmugsy

It'll happen some day, a reduction in higher rate relief. Whether it's wise to fill a pension under the prospect of a Corbyn government is anyone's guess. If he were to go full Communist Bulgaria he'd steal all pension pots anyway.

Alexland

Who knows but it's funny how you don't appreciate something until someone threatens to take it away!

When it was last mooted it made me realise that I wasn't taking enough advantage of the perk so have stopped overpaying the mortgage (we have a forever house and were aiming to be repaid at 40) and started ploughing money into the pension. This year I expect to use around £35k of the allowance with a small salary sacrifice boost and will be a basic rate taxpayer for the first time this decade.

To be honest I don't think the current system is fair and it gives insufficient incentive for middle earners to save so I would welcome a rebalance to a flat rate of tax advantage regardless of income.

I am hoping to reduce my responsibilities over time so it might even work in my favour in future when my earnings are lower.

Alex

Aretnap

I pay in as much as I can spare on the assumption that the days of salary sacrifice are probably numbered - not necessarily in this budget, but when the full economic horror of Brexit hits, or next time Labor get in, it's an obvious low hanging fruit for a chancellor who needs a lot of money.

If it turns out that I'm wrong then I'll end up with loads of money in my pension and I guess I'll just have to retire early. Bummer!