Significant changes to pension tax relief could be on the horizon - what should you be thinking about now?

As part of the 16 March Budget Chancellor George Osborne will announce the outcome of a review of tax relief on pension contributions. Many people are forecasting radical changes, in line with the other changes we have seen to pensions legislation over the last 2 years.

Many authoritative sources are forecasting a flat-rate 'savings incentive' of between 25% and 33% for everyone.  At present tax relief on a personal pension contribution is given at the taxpayer’s marginal (i.e. highest) rate of tax

If this is indeed the case then higher-rate (40%) and additional-rate (45%) taxpayers are expected to lose a significant tax relief worth up to £8,000 a year and should consider bringing forward any planned pension contributions.

Conversely basic-rate and non-taxpayers could consider delaying any planned contributions for a few weeks in case any changes take effect immediately. 

Clients should contact us for advice tailored to their circumstances.