Osborne could scrap higher rate pension tax relief-reports

Pensions become irrelevant

For most people I would have thought the flexibility and simplicity of an ISA far outweighs that of a pension. The rafts of pension rules that change almost every 6 months, the inflexibility of taking income/capital out, and the fact that income is taxed on exit just make them ridiculous. (A pension is only really a HRT game anyway - 40% relief on the way in 25% tax on the way out). Presumeably this idea would be part of the "we are all in this together plan" it levels the pain for HRT payers and public sector pensions. This would be the final nail in private (non company) pensions coffin. Lets go the whole way and allow people to transfer upto £250,000 from any old pension fund into an ISA - and remove millions from the hideous pensions muddle.

Posted by: David Norman

Higher rate relief by the back door

Those that have state subsidised pensions (e.g. George Osborne)would continue to get higher rate relief by the back door. This is because their pensions are partly funded directly by the taxpayer and not through contributions.

Posted by: Paul

Not before time

Sorry but I have never understood why anyone who earns sufficient to pay higher rate tax "needs" an incentive to "save" Abolish higher rate relief and no one in their right mind, without an employer cointribution, would pay into existing private plans. The solution is to make a minimum level of contribution to a national plan compulsory and to stop pretending. No one has the right to be poor in old age. Compulsion, not higher tax relief is the solution.

Posted by: John Blackmore

Tories wave the Red Flag

This old chestnut comes up so frequently it has hairs on it. How do you prevent HRT relief if achieved via salary sacrifice? You can’t if it’s done carefully. All you are doing is penalising the self-employed HRT payer and therefore encouraging some imaginative black economy moves. It also doesn’t seem to have occurred to the likes of Mr Blackmore that the HRT taxpayer is invariably an employer. Disincentive him and how keen will he be to provide anything but the bare compulsory minimum for his employees? It also seems to have escaped his notice that these people in retirement will be paying a proportionately higher amount of tax so in the end it rather evens itself out. But of course this doesn’t appeal to those who would like us to live in a Stalinist world where it’s equality for all – except the apparatchiks. Just another reason for the most successful to emigrate and allow this Nation to become even more second rate.

Posted by: Harry Katz

Benefit in kind

Harry - Wouild it not be possible to tax employer contributions at the higher rate ? They are after all just another form of salary.

Posted by: John Blackmore

And for your next joke.

@ John Blackmore All those in final salary schemes will no doubt be ecstatic. Public Service workers are enraged already; just imagine what this would do! Presumably MPs would also be affected and those buggers have never done anything that would disadvantage themselves. It will probably be political hara kiri, as the traditional Tory voters would just abstain at the next election - what have they to vote for? A true Tory Government seem to be a thing of the past. What is it that a Conservative Government could possibly offer that would attract their 'natural' supporters? They are already treading on thin ice - this could well be the last straw. And as I mentioned before this will do wonders for the Black Economy. Do we really want a Greek replication in the UK? Remember the art of plucking the goose is to take as many feathers with the minimum of hissing. Can you imagine the squawks from those affected? Can you imagine the overall loss of what remains of good will towards pensions of any sort? And as l also said before; the rush for the exit will I believe be very marked indeed. What prospects for prosperity will this country now offer the go ahead and successful 30-40 somethings? 50% tax, no tax breaks, stealth taxes up to your armpits, stupid property prices, ridiculous education fees, Political Correctness run riot, Green Nonsense and enormous immigration. Last one to leave please switch out the light.

Posted by: Harry Katz

What was the point in voting Conservative? + by the way, I am a Conservative party member - now thinking of leaving.

The deal is this: You GET tax relief at your highest (Income Tax) rate when you make a pension contribution and you PAY Income Tax at your highest rate when you receive your pension income. Only an idiot would pay into something that gets only 20% relief, but which could be taxed at 40% or 50% tax on the benefits. (And if you think the 25% PCLS is safe, think again!) Where is the benefit to the state to reduce the incentive to pay into a pension, thereby reducing your dependency in old age upon the state? Osborne won't care, he'll probably be on an Oligarch's yacht somewhere in the Black Sea having sundowners with the Prince of Darkness (Peter not Ossie.) I can't resist the 'Osborne' connection - talking of Ossie, one of Black Sabbath's songs is "Am I Going Insane(Radio)" George Osborne should perhaps have it as his theme tune - he certainly seems bent on completing the utter destruction of pensions (excepting MP's pensions, of course) in the UK, which job was started by one G Brown in 1997. BTW, what is the logic in retaining the 'Lifetime Allowance' now that the Annual Allowance has gone down from £255,000 to £50,000?

Posted by: Dave