Chancellor expect to announce change
High earners urged to act on tax relief ‘hammer blow’
Britain’s higher earners should consider reviewing their pension tax relief strategy “sooner rather than later”, warns the chief executive of one of the world’s largest independent financial advisory firms.
Nigel Green, deVere Group CEO and founder, described the Chancellor’s expected move to slash pension tax relief, probably in the Autum Statement, as a “hammer blow for those wanting to get ahead in life” and urged early action.
He said: “Let’s be clear: this is a tax raid – and the time to act is now for those who could be affected.
“George Osborne has already signalled plans to change existing pension tax breaks in the next Budget. The annual allowance will be slashed from £40,000 to £10,000 for many higher earners and there will be hefty tax charges for anyone who goes over the threshold.
“However, he might bring these plans forward to help plug a hole in the Budget. As such, those on higher incomes should review their strategy sooner rather than later to help mitigate being stung and to make the most of their retirement savings.
“I expect many top earners will want to act ahead of this month’s Spending Review. For instance, many might consider making a larger one-off contribution in order to benefit from the higher tax relief.”
Mr Green added: “The slashing of pension tax breaks is yet another depressingly familiar hammer blow for those wanting to get ahead in life through hard work and prudently saving for their future.
“It penalises saving when it has never been more important to do so and as it increasingly becomes a personal responsibility. We’re all living longer, meaning savings need to last longer, debt levels are high, care and health costs are climbing, and there’s a considerable reduction in the generosity of both state and private pensions.
“Given these factors, and the consequences for the country and for families of an increasingly older population with few financial resources, it seems madness to discourage savings in any way. Indeed, we need to do everything we can to revitalise a strong, long-term savings culture.”