Pension tax relief changes could come as soon as next month’s emergency budget and could possible affect the UK’s top earners. Wealth managers are advising they should act soon. As part of their election manifesto the Tories pledged to reduce tax relief on pension contributions for those earning over £150,000.
Currently, individuals can contribute up to £40,000 to their pension while claiming full tax relief – but the Conservatives said they’d gradually reduce this figure down to as little as £10,000 for high earners.
Additional rate taxpayers could lose as much as £13,500 this year if they don’t act quickly to take advantage of the existing pension rules while they are still available. A viable strategy and sensible approach for some additional rate taxpayers would be to contribute the maximum amount into a pension before the budget. This would allow and contributions to achieve the full tax relief.
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. Time to rethink your pension strategy?