Pension tax relief cuts would be another bad intergenerational deal
Should pension tax relief be hacked back to a flat 20 per cent?
Despite the near annual pre-Budget debate, this year’s ‘pension tax relief for the chop’ rumours have come as something of a surprise.
A swipe at higher earners and those who aspire to one day join their ranks, is not quite what you’d expect from a big majority, free spending, freshly-elected Tory government.
Why would Sajid Javid consider cutting pension tax relief? To save money it seems
This is a move more likely to come from the playbook of the Corbynistas or austerity acolytes.
So, why would Chancellor Sajid Javid be considering this (if he really is)?
To save money, it would seem, as the idea flagged in this year’s set of whispers is simply to drag everybody down to basic rate pension tax relief.
This adds 25 per cent automatically to pension contributions, taking people back to the position they were in before 20 per cent basic rate income tax was paid.
Going to that basic level for everyone stands in contrast to the other version of this argument from proponents of tinkering with pension tax relief, which involves a new flat rate somewhere in the middle.
Adding 33 per cent is the generally…