'Few winners and many losers' How Rishi Sunak changing pension tax relief could hit you
The much discussed plans would remove the higher rate of relief and simplify the system, introducing a flat rate of relief at 25 percent.
The analysis, from Pensions and Lifetime Savings Association (PLSA), said: “Removal of the higher rate of pensions tax relief would be of no benefit to the majority of taxpayers who pay Basic Rate income tax and even the introduction of a new, more generous, single rate of 25 percent would only result in a modest uplift in pension income for some savers.”
Nigel Peaple, director of policy and advocacy at PLSA, said: “Our analysis shows that such reforms create few winners and many losers.”
He said that while it might seem reasonable to reduce tax relief for highest earners, “it should be remembered that many more than 13 percent of taxpayers will earn this amount at some time, and many only for a short number of years towards the end of their careers – when pension saving is often at its highest”.
They looked at what the effects of a flat rate at 20, 25 and 30 percent would be.
For a flat rate at 20 percent, someone on median earnings (£29,000 as one approaches retirement) they would see “no change” to their contributions or tax bill, according to the report.
