Pension tax relief rumours ahead of 'tax day'

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The Treasury is due to issue consultations on a number of tax changes on Tuesday, with The Telegraph reporting that a cut to higher rate pensions tax relief could be among them. 

The Treasury offers tax relief on pension savings worth about £40bn a year.

Investment platform provider AJ Bell predicts levelling pensions tax relief at 20% for all earners would cost someone on £50,000 a year £3,744.

"The impact would be most painful for people in public sector DB schemes, and the sad truth is that this would include front line NHS and emergency services workers who have worked so hard to help the country through the Covid-19 pandemic," said its chief executive Andy Bell.

“If the Treasury thought the anger caused among NHS doctors by the tapered annual allowance was bad, that will pale into insignificance compared to the mutiny we are likely to see if higher-rate pension tax relief is scrapped altogether."
  
HMRC is due to publish a list of all new and existing tax reliefs with their objectives in the autumn and specify the objectives of each, after the Public Accounts Committee said tax reliefs and their impact were poorly understood. 
 
It also said that “HMRC and HM Treasury are insufficiently curious about the impact of some key tax reliefs on different groups". One of its recommendations is that HMRC should publish data showing who is benefitting, split by income and groups with protected characteristics, public versus private sector and people in defined contribution and defined benefit schemes. HMRC is due to do so by December. 
 
   
Should the Treasury cut tax relief on pensions for higher-rate taxpayers or would this give the wrong message about pension saving and punish middle income earners?
Ian Neale
Steven Cameron
Tim Gosling
Malcolm McLean