In the lead up to the UK general election, Director of UK Private Client Services Vince Cheshire looks at what the major parties have planned for pension contributions.
For individuals expecting high earnings in 2015/16, these two weeks until polling day may be crucial for decision making on how much you’re putting in to your pension pot.
Here’s a quick overview of what’s in the main party manifestos:
The Tories have outlined plans to scrap the highest rate of tax relief for those who are earning £150,000 or more, and paying additional rate tax of 45%. This measure to help pay for removing most family homes from inheritance tax.
Labour is pledging to target the top 5% of retirees, removing their free perks and like the Tories – doing away with higher tax rate relief on contributions by those who are yet to reach retirement age.
The Lib Dems are also talking tough on wealthy pensioners and will review tax relief on contributions, looking at introducing a 30% flat rate that would shave as much as 15% from the pension tax breaks currently available to higher earners.
The SNP also intends to take a close look at the pension tax relief currently available to wealthy savers.
It’s a time of great change for private and workplace pensions, and now we’re seeing tax breaks for high earners being targeted as the major parties look to drum up additional funds for other policy commitments. Individuals with employment income in excess of £150,000 may wish to seriously consider bringing forward any planned pension contributions into the next fortnight.