Posted on Thursday 11 June 2015 by Ulster Business
George Osborne is expected to reduce pension tax relief in his July 8 budget
High rate tax payers could lose as much as £13,500 this year if expected changes to pension tax relief are enacted in July’s budget.
That’s the warning from wealth managers Brewin Dolphin which said high earners need to act quickly to take advantage of existing pension reliefs while they’re still available.
It pointed to the Conservative government’s pledge to reduce pension tax relief for anyone earning more than £150,000, a move most likely to take place in Chancellor George Osborne’s July 8 budget.
Hal Catherwood, Head of Office at Brewin Dolphin in Belfast, said that additional rate taxpayers should put as much into their pension pots as possible before then.
“It may be sensible for some additional rate taxpayers to contribute the maximum amount into a pension, while the current tax reliefs and contribution limits are available, as long as they have sufficient disposable income and can afford to do so.”
Currently, everyone can contribute £40,000 a year to their pensions and gain full tax relief on this contribution.
However, the Conservative party manifesto suggested that the annual allowance will be reduced by £1 for every £2 an individual earns over £150,000. Someone earning £190,000 would have a £20,000 allowance while someone earning £210,000 and over would have a £10,000 annual allowance.
This would reduce the tax relief on a full annual pension contribution from £18,000 to £4,500 for someone earning £250,000. The new rules could come in immediately after Mr Osborne gives his Budget on July 8.
While the timing of any change is not known - there is a possibility they could be introduced as early as the Budget, or delayed until April 2016 - but Brewin Dolphin said it would be prudent to take steps now.