Pension Tax Relief

In the last of our series of reviewing the main political parties stance on key areas of Financial Planning – we take a look at Pension Tax Relief

The Tories ruffled a few feathers with their proposal to reduce pension tax relief for people earning more than £150,000 to fund their inheritance tax property plan. The cut would mean additional rate tax payers could only receive full relief on £10,000 of pension contributions per year rather than the £40,000 they currently enjoy.

Labour is also targeting additional rate pension tax relief, proposing to reduce the amount the amount savers can claim from 45% to 20%. This would fund a proposed cut in tuition fees. Labour has also said it would reduce the annual allowance to £30,000.

Pension minister and Liberal Democrat, Steve Webb, is a firm proponent of a flat rate of tax relief and has struggled this could be set at around 33%. The party has not fully endorsed Webb’s proposals but has committed to review an introduction of a flat rate of relief.

No half measures here: the Greens want to abolish pension tax relief and use the £20 billion they think this would raise to fund a £180 a week flat rate state pension.

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