20 February 2012
Clients urged to consider pension contributions ahead of budget
Mattioli Woods is urging clients to consider pension contributions in the run-up to the budget on 21 March. There has been much press speculation recently as to whether or not there will be any restrictions made on tax relief to pensions. Some politicians are thought to be keen on abolishing higher-rate tax relief on pensions, whilst others are toying with the idea of restricting how much savers can contribute annually.
There are many possible scenarios being discussed in the media. It has been calculated that if higher-rate tax relief were to be removed for anyone earning over £100,000, this could save £3.6 billion. Scrapping higher-rate tax relief for all and restricting tax relief to 20% would increase this figure to £5 billion. Scrapping tax relief at 50% would produce a circa £500 million saving and there have also been estimates for savings on the reducing of the annual allowance, and removing the National Insurance savings on salary sacrifice.
Until the budget on 21 March 2012, this is all still very much speculation but any restrictions would certainly cost higher-rate taxpayers and as per previous changes to pension rules, any changes that have been introduced would be with immediate effect.
Murray Smith, Marketing and Sales Director, commented “We are keeping a close eye on the situation in an ever changing pension landscape and advising our clients that if they are considering making pension contributions prior to the end of the tax year, then it may be worth considering accelerating this to 20 March 2012 rather than 5 April 2012”.
“Regardless of the outcome, Mattioli Woods will work proactively with clients to adapt pension strategies accordingly,” he added.
If clients have any queries regarding carry forward calculations, please do not hesitate to contact us today.
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