Pension changes due if Labour wins election
For some time, Labour have said that they would limit tax relief on pensions for "additional rate" taxpayers (those with income over £150,000) if they win the next general election. This plan has now been confirmed and they would use the savings to pay for a reduction in university tuition fees from £9,000 to £6,000.
Labour has declared that it would limit tax relief to 20% for top-rate taxpayers (those with income over £150,000).
Labour also plans to reduce the annual allowance from £40,000 to £30,000 and the lifetime allowance from £1.25 million to £1 million.
As current polls indicate that Labour could form part of the next government, the future of higher-rate tax relief could well be in jeopardy.
For higher-rate taxpayers, it might therefore be worth making contributions now to ensure they receive the greater tax benefits and possibly to “carry forward” any unused allowance from the three previous years.
Obviously, we do not know the outcome of the election and it may not happen, but for some investors, being safe rather than sorry might be a better option.