Rumoured plans to limit pension tax relief in next month’s Budget will hit high earners hard, a tax expert has warned. Grant Thornton tax partner, Louise Evans, said that, while pension contributions of higher earners may help pay towards lifting everyone earning under £10,000 out of tax, there was also speculation the Government would limit pension tax relief to the basic rate of 20 per cent. "For high earners, this move will feel like a tax rise as when paying the top rate of tax you can claim relief of up to 50 per cent on your pension contributions,” she said. She also warned wealthy individuals may be reluctant to buy British due to rumoured plans for VAT of 25 per cent on luxury items. Families may also be feeling the pinch, with proposals to abolish child benefit for higher rate tax payers. Leighton Reed, tax director at professional advisers Broomfield and Alexander, said: "With the 40 per cent band now starting at £42,475, a family where both spouses earn around £40,000 each year and have a joint family income of £80,000, will not lose the child allowance, whereas one family earning £42,475 will lose theirs."
http://www.50percenttax.co.uk/index/2012/3/21/pension-tax-relief-changes-will-feel-like-a-rate-rise.html
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