Pension tax breaks may be back on the line of fire as Rishi Sunak weighs more options to repay the Covid-19 expense bill.
It is often rumored that relief should be on the point before major budget announcements.
However, in recent years there have been no predictions that it will be cut.
The Telegraph reports that ahead of Tuesday’s “Tax Day”, when the Chancellor will outline a series of new consultations on the tax landscape, tax breaks for pensions are in the sights of the Treasury Department.
If the Treasury Department offers tax breaks on pensions at marginal tax rates, it will get £ 40 billion a year less than usual.
The Telegraph reports that discussions in Whitehall have been going on for about six months about cutting tax breaks at a higher tax rate or introducing a flat tax break of 20 or 25 percent.
While the reasons for a pension tax cut cut may be stronger this time around – data released on Friday showed borrowing hit £ 19.1 billion for February, its highest level on record and miles ahead of £ 1.5 billion that were borrowed 12 months earlier – there are also renewed policy considerations for the government to take into account.
As Tom Selby, senior analyst at AJ Bell notes, members with performance-related benefits would face great success, including key public sector employees such as NHS staff who have been vital in responding to the coronavirus.
Health workers and activists have already raised concerns about the impact of the annual allowance on health professionals, many of whom have reported retiring early or reducing shifts to mitigate the tax impact on their pensions.
Experts share suggestions for a blanket pension tax relief
Others, however, have suggested that the government, keen to hammer home its leveling agenda and secure voters to the “Red Wall,” which it won in the last election through obvious tax hikes for the rich, is an attractive political target could be .