Should pension tax relief be halved to 20% for higher earners?

16 October 2017

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Pensions are a powerful tax break – allowing and encouraging people to save for retirement from PRE-TAX salary – at a cost to the Treasury of an estimated £35bn/yr. In simple terms… FOR EACH £100 SAVED IT ONLY COSTS A… - Basic 20% rate (salaries c. £11,500+) taxpayer £80 from their pay packet - Higher 40% rate (salaries c. £45,000+) taxpayer £60 from their pay packet - Top 45% rate (salaries c. £150,000+) taxpayer £55 from their pay packet Some argue this is fair as everyone simply saves on paying income tax, others say higher earners do better as their tax gain is at least double. One idea mooted for the Autumn Budget is everyone just gets a 20% tax break, ie, a cut for higher earners, and a saving to the Treasury of over £10bn/yr. Do you think pension tax relief should be cut for higher-rate taxpayers?

Pensions are a powerful tax break – allowing and encouraging people to save for retirement from PRE-TAX salary – at a cost to the Treasury of an estimated £35bn/yr. In simple terms…

FOR EACH £100 SAVED IT ONLY COSTS A…

- Basic 20% rate (salaries c. £11,500+) taxpayer £80 from their pay packet
- Higher 40% rate (salaries c. £45,000+) taxpayer £60 from their pay packet
- Top 45% rate (salaries c. £150,000+) taxpayer £55 from their pay packet

Some argue this is fair as everyone simply saves on paying income tax, others say higher earners do better as their tax gain is at least double. One idea mooted for the Autumn Budget is everyone just gets a 20% tax break, ie, a cut for higher earners, and a saving to the Treasury of over £10bn/yr.

Do you think pension tax relief should be cut for higher-rate taxpayers?

Results

I’m a non-taxpayer (702 votes)

Yes, a flat 20% rate for everyone		430 votes (61%)
No, keep it as it is now		235 votes (33%)
Scrap all tax relief for pensions		37 votes (5%)

I’m a basic 20% rate taxpayer (3607 votes)

Yes, a flat 20% rate for everyone		2323 votes (64%)
No, keep it as it is now		1148 votes (32%)
Scrap all tax relief for pensions		136 votes (4%)

I’m a higher 40% rate taxpayer (2712 votes)

Yes, a flat 20% rate for everyone		668 votes (25%)
No, keep it as it is now		2018 votes (74%)
Scrap all tax relief for pensions		26 votes (1%)

I’m a top 45% rate taxpayer (278 votes)

Yes, a flat 20% rate for everyone		88 votes (32%)
No, keep it as it is now		176 votes (63%)
Scrap all tax relief for pensions		14 votes (5%)

                   7,299 votes received.

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