We would never normally consider trying to predict future legislative changes or to second guess the powers at be because politicians and policy makers can be unpredictable and ending up with egg on ones face would be all too easy.
However, there is growing momentum behind the opinion that The Chancellor will make further changes to pension tax relief in the Spring Budget.
Last year the Government consulted on pensions and tax relief and the wording of their paper was such that it got tongues wagging immediately. The rumours and conjecture have carried on and now a quick Google will lead you to any number of articles predicting changes and here are three that are worth a quick read if you have the time:
- Flat-rate pension relief fairer to all, say insurers
- Pay more and beat the pensions tax changes
- Pension taxes are ‘milch cow’ for chancellor, says IFS head
Those who have sat with me over the last few years will recognise the following soundbite as its been a regular topic of conversation for a while now. If you’re a footballer or megastar earning hundreds of thousands a week, why should you get tax breaks in Austerity Britain? Equally if you work hard to earn a modest wage and live in the South East (whether renting or owning your home) with 2.4 kids and all the incumbent expenses, then every bit of tax relief you can grab is very, very important.
Somewhere in Whitehall there must be some lengthy debates about exactly what the new rules will look like, to whom they will apply and from when they will commence. We can only hope the outcome is fair and reasonable and still rewards those who wish to save for their future.
The clock is ticking so don’t delay
Pension tax relief has been a fundamental part of financial planning during the 25 or so years I’ve worked in this profession and it tearing up the rules will be yet another hurdle to overcome when trying to convince people to put aside money for retirement and maybe forgo the 52″ telly for a while.
I’ve no idea what George Osborne has in mind but a change does seem likely. This does therefore appear to be a ‘buy now whilst stocks last’ moment if you are a higher rate tax payer and would like to make the most of the current rules.
The budget is on 16th March so there are a few weeks to go but those days will fly past so don’t put it off any longer, give us a call.