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Scrap higher rate pensions tax relief, says think tank (Daily Telegraph)

    The Daily Telegraph reported on the CPS publication 'Incentivising retirement saving: the end of tax relief, and a new beginning', Monday 21 April 2014. 

    To read the full article, visit the Daily Telegraph website

    "A report by the Centre for Policy Studies has warned that the present system – where savers receive a tax refund at their highest marginal rate of 20pc, 40pc or 45pc up to an annual limit of £40,000 – is “ineffective and not in the national interest”.

    Under the think tank’s proposals, all savers would receive 50p per pound up to a limit of £8,000 from the Treasury, regardless of income level or previous tax contributions.

    While this may benefit basic rate taxpayers, who currently receive 20pc tax relief and would therefore gain 13pc extra on pension contributions, the wealthiest savers would be hit by a cut of 12pc from their present level of 45pc. For example, a post-tax pension contribution of £5,000 would gain basic rate taxpayers an extra £1,250 under the proposals, while those taxed at 45pc would stand to lose £1,591.

    The Lifetime Allowance – the maximum amount a saver can build up that benefits from tax relief over their life, which currently stands at £1.25m – would also be scrapped as it adds “considerable complexity to the pensions landscape”, the report said."

    To read the full article, visit the Daily Telegraph website

    Date added: Tuesday 22nd April 2014