According to an article in today’s Financial Times citing “officials” close to ongoing talks about how to impose new taxes on the wealthy, Osborne is considering reducing the maximum annual pension contribution exempt from tax from £50,000 to £40,000. In his first Budget, the so-called Emergency Budget in 2010, Osborne reduced the threshold from £255,000 to the current £50,000.
The FT estimates that another change to the threshold would raise about £600m, which compares favourably with the estimated £70m a 1% increase in the stamp duty land tax for properties worth between £1m and £2m would raise.
Neil Chadwick, technical manager at Royal London 360°, said, if the rumours are true, the Conservative party will be doing more long term harm than good.
“The UK Government’s ‘Robin Hood’ fiscal policy is simply not sustainable,” said Chadwick. “The reality is that an increasingly large number of people will avoid saving for their retirement and or chose to leave the UK altogether.
“Whilst I agree with the government’s policy that everyone should pay their ‘fair share’, without incentivising wealthy people to remain in the UK, the country’s hopes of economic growth through private sector investment are unlikely to improve.”
