The Treasury is considering whether to introduce a flat-rate of pension tax relief to help fund the National Health Service.
According to a report in The Times, the Treasury has started to investigate the flat-rate proposal and says it could raise an additional £4bn in revenues.
In June, the government promised to increase spending on the NHS by £20bn a year and a flat rate could help chancellor Philip Hammond raise money without breaching fiscal rules.
Tax relief is currently assigned in line with a person’s marginal rate of income tax, which distributes relief towards higher earners and costs the Government around £40bn a year.
A flat rate of 28 per cent has been proposed by the Resolution Foundation to help millennials save for later life and the Royal Society of Arts has suggested a 30 per cent rate to help the self-employed.
Towards the end of June, the government said it will “examine the process for payment of pensions tax relief” in response to concerns low-paid workers in net pay schemes are losing out.
No further detail has yet been released on this proposal, nor has any timescales been mentioned. We will watch with interest.
Source: www.moneymarketing.co.uk
