High earners in the UK need to prepare for a raid as Chancellor Phillip Hammond is reportedly sharpening his knives to cut tax relief on contributions in the upcoming Budget.
The Mail on Sunday reports that an unnamed senior government source said Hammond had identified some £38bn in pension tax relief as “one of the last remaining pots we can raid.”
For deVere’s boss, Britain’s highest earners should consider reviewing their pension tax relief plans ahead of this expected raid.
“The Chancellor has huge funding gaps to fill in public services and it can be expected that pensions will again be attacked to bolster government coffers.
“Such a raid on people’s hard-earned retirement nest eggs would highlight once more that successive British governments consider people’s retirement savings as easy, low-hanging fruit to be plucked when necessary,” Nigel Green, founder and chief executive of deVere Group, said in a statement.
The source told the Mail on Sunday that Hammond was planning to target “people who can afford to put tens of thousands of pounds into their schemes each year”.
“It is almost inevitable that pension tax relief will be a target as the government looks to plug gaps in November’s Budget. Many high earners will, as a result, be considering a review of their options sooner rather than later”, Green added.
If confirmed, Hammond will follow in the footsteps of Gordon Brown. In 1997 the then Chancellor raided the pensions pot in what now costs taxpayers nearly £10bn a year – double the amount Brown had initially outlined.
“As it is likely the pension contribution relief for those on higher incomes will be reduced, many might now consider making a larger one-off contribution before the Budget, in order to benefit from the higher tax relief whilst they still can.”
For the founder of the financial advisory group, “continually raiding pensions tax relief is helping to undermine a culture of saving at time when it has never been more necessary to promote it.”