Top Up Your Pension before the March 2020 Budget
6th March 2020
The rumours associated with former Chancellor Sajid Javid suggested he was considering changes to the current pensions tax relief to make the system fairer for those on lower incomes which includes cutting the pensions tax relief for high earners to 20%.
Under the current rules tax relief is paid on savers’ pension contributions at the highest rate of income tax they pay. The former Chancellor believed that this change would result in generating income for the government of £10bn rather than costing them £40bn under the current system.
That said, it is estimated that this would impact on around 4 million people, most of whom you would have expected to vote Tory in the last election, so it would be a brave move.
Now the mew chancellor, Rishi Sunak, has to decide whether this is a policy he also endorses or whether he is looking to raise government income in other ways. One area that is always up for discussion is Inheritance Tax (a topic we recently covered – read more here), and the rumour mill is working overtime. A cross party group of MPs has been calling for a significant cut in Inheritance Tax from 40% to 10%. There are also recommendations to scrap the ability for people to give tax free gifts to their family over a seven year period before the person dies. This would be replaced by a maximum allowance of £30,000 over a lifetime.
To date, Rishi Sunak has not commented on either of the above so we will have to wait and see. And of course the Coronavirus outbreak will doubtless have a role to play as well.
One would have to think however, that if people have the capacity to top up their pension before March 2020 it would be wise to do so. You could argue that it would a prudent move anyway.
If any of the above is of interest to you and you would like to discuss your financial position further, you can arrange to meet with one of our financial advisers by scheduling a meeting here >>