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Topics: Tax relief| Pension| Treasury| Budget 2012| George Osborne
Deputy prime minister Nick Clegg and Treasury secretary Danny Alexander will meet with David Cameron and George Osborne today to demand more tax on high earners’ pensions.
The Liberal Democrats will push the Prime Minister and his Chancellor to speed up the increase of the lower income tax threshold to £10,000, the Telegraph reports.
It is understood that Clegg and Alexander (pictured) will reveal to the Conservatives their plans to fund the tax break for lower earners with progressive taxes on the wealthy.
Reducing tax relief on pensions will be one of the proposals put forward by the Liberals, sources have claimed.
Alexander is likely to propose that higher rate tax-payers will only receive basic rate tax relief on their pension contributions, although Osborne is known to be opposed to the idea.
However, a compromise could be that only those earning more than £100,000, rather than those earning more than £45,000, will be stripped of higher rate tax relief on their pensions.
A deal like this would save the taxpayer £3.7bn per year.
Another main source of funding for the tax break on the lowest earners is the General Anti-Abuse Rule (GAAR) proposed in a report prepared for the Treasury in December.
Clegg has hinted the GAAR could be included in this year's budget.
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fair for All
Tax free income should be no less than £15000 then most low earners and some pensioners will be able to buy food and Heating etc. This can be offset by stopping all these millions of bonuses we keep seeing from publicly owned businesses and the public sector. I receive my old age pension, and I have a very small old company pension of only £83 per month on which i am taxed £41. Does this seem fair when you see all the millions directors get in bonuses for not making profits.
Posted by: A Pensioner
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Good grief!
If ever you wanted any proof of what nincompoops these people are – you have it now. Apart from decimating pensions yet further I don’t think they realise or understand that all that they will be hurting is the self-employed. The employed can work with salary sacrifice and that is tantamount to getting full higher rate relief. And proving whether it is a company single premium contribution or salary sacrifice is well-nigh impossible. When will politicians finally understand to stop meddling? If that numptie Cameron would have had any guts, he would have gone straight back to the country after the last hung election to get a clear mandate – but he was too weak to risk it.
Posted by: Felix Godwyn