17 April 2009
Pensions may be targeted in next week's Budget as the Government
grapples with a deepening black hole in the public finances.
According to sources, the Chancellor may scrap higher-rate
income tax relief on pension contributions, which according to City
estimates could raise between £5billion and £7billion a year for
the Treasury.
If higher-rate income tax relief is withdrawn, higher-rate tax
payers would only get basic rate income tax relief on pension
contributions, which is 20 per cent. Those paying higher-rate tax
currently contribute £60 for every £100 that goes into their
pension pot. If the new rules are introduced, they would have to
contribute £80 for every £100.
