TaxPersonal TaxOsborne may cut pension tax relief threshold

Osborne may cut pension tax relief threshold

The maximum tax-free pension contribution could drop from £50,000 to £40,000

THE CHANCELLOR could cut tax relief for pension contributions of richer voters, after shelving plans for a tax based on higher council rates for expensive properties.

George Osborne has, however, promised to strike a balance between a planned scale-back on welfare – expected to achieve a further £10bn of benefit savings by 2015/16 – and new taxes on the wealthy, reports the Financial Times.

While he maintains the move is not part of a “trade-off” with the Conservatives’ Liberal Democrat coalition partners, the search for new revenues is coming to a head in the run-up to his Autumn Statement on 5 December.

Osborne has to hand in his final proposals to the Office for Budget Responsibility by 28 November.

He reportedly met with coalition colleagues on Monday to outline his options, with moves to reduce the tax relief available for wealthier voters on their pensions apparently “on the table”.

In his 2010 emergency Budget, Osborne cut the maximum annual pension contribution exempt from tax from £255,000 to £50,000.

This year’s Autumn Statement is expected to see the maximum contribution dropped to £40,000, which would bring in about £600m, while a further cut to £30,000 would generate £1.8bn, but would likely anger Tory voters.

Other changes expected on 5 December include the use of major investments from wealthy foreign migrants to speed up their settlement in the UK to create a dedicated youth unemployment fund or “Big Society Bond”.

New council tax bands are out of the question after the prime minister expressed concerns it would alienate traditional Tory voters.

As a result, an alternative under consideration is an increase in stamp duty land tax on property sales, although it is thought any additional yield from the step will be modest, with about £70m expected from increasing the 5% rate for properties between £1m and £2m to 6%.

Related Articles

Colin: Disappearing into Osborne's black hole

Personal Tax Colin: Disappearing into Osborne's black hole

2y Taking Stock
Osborne and Darling warn of £15bn post-Brexit tax hike

Personal Tax Osborne and Darling warn of £15bn post-Brexit tax hike

2y Richard Crump, Writer
UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

Corporate Tax UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

2y Fraser Simpson, Reporter
Colin: Just another brick in the pension plan

People In Practice Colin: Just another brick in the pension plan

2y Richard Crump, Writer
Cameron to announce new corporate offence for tax evasion

Administration Cameron to announce new corporate offence for tax evasion

2y Fraser Simpson, Reporter
Budget 2016: Personal tax roundup

Personal Tax Budget 2016: Personal tax roundup

2y Calum Fuller, Reporter
Banks’ £135m tax avoidance scheme shutdown by authorities

Corporate Tax Banks’ £135m tax avoidance scheme shutdown by authorities

2y Fraser Simpson, Reporter
Chancellor delivers 'Osborneomics'

Accounting Firms Chancellor delivers 'Osborneomics'

2y Robert Maas