Budget Speculation 2020 Cut Higher Rate Pension Tax Relief
Published / Last Updated on 12/02/2020
Wipe out High Rate Relief – Very Easy Low Hanging Fruit
Speculation that the government will cut higher rate tax pension relief. We suspect that this is the easiest of the 'low hanging' fruit by removing high rate relief on pensions as they have already done this for property investments where higher rate tax payers have only been allowed to claim a proportion of their finance/mortgage/loans expenses at 40% relief which has gradually been reduced over the last few years to 20% relief on finance costs.
The precedent has already been set and we suspect a cut in pension tax relief will come sooner rather than later.
For private pensions it is relatively simple to operate a similar model and reduction path as they did for property finance expenses.
For company pensions on 'net pay' arrangements where your pension contribution is deducted from gross pay before you are taxed, meaning that you would get high rate relief automatically, we suspect HMRC could either simply send you a tax bill or reduce low tax code to claw the over paid tax relief back.
