Plans to cut pension tax relief for high earners
Just before we went to the polls for the General Election Partner Emma Andrews of our Lenham and Maidstone offices produced a useful blog post comparing the tax plans of all the keys parties from their respective manifestos.
Warning affecting pensions tax relief
In her summary Emma mentioned the Conservatives plan proposing cuts to pensions tax relief for those with an income above £150,000. Added to this was the announcement made by George Osborne in the March budget that from April 2016 the Lifetime Allowance for pension tax relief will also be dropped from £1.25m to £1m, and thereafter indexed for inflation from April 2018 to protect pension pots. Therefore we know that there will be changes affecting high wealth individuals and their pension planning in the July Budget. The unknown quantity, however, is when these changes will be effective from and even if more legislation will follow.
Act soon or repent later?
Whilst no-one can fully predict the outcome of a budget of course, there is increasing speculation that this topic could well be a focus of George Osborne’s next Budget speech. It therefore makes sense for high earners to seek pension advice from a reputable adviser prior to the budget to review their options.
Lee Giles, Chartered Financial Planner at the independent financial advisers Argentis Financial Management Ltd (now Gallagher) states that “all high earners should consider reviewing their needs immediately. It may be appropriate to discuss the potential advantages of making contributions now, rather than wait until later in the tax year. Furthermore, the impact of the lifetime allowance needs to be carefully considered and again it may be appropriate to maximise any planning opportunities as early as possible”.
We will follow this news story with further budget coverage after the 8th July.