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09

LibDems approve pension tax relief cut

Open-access content 17th September 2013

The Liberal Democrats have voted to cut an individual’s lifetime pension tax relief allowance by £250,000 to £1m

In a debate on tax policy at the party's annual conference in Glasgow, Chief Secretary to the Treasury Danny Alexander said the change was needed as 58% of the total £35bn spent on tax relief went to the richest tenth of the population. 

However, the party voted to retain the existing £40,000 annual relief allowance.

In a number of votes on tax policy, the party also pledged to push for further increases in the personal allowance to cover the earnings of someone working full-time on the National Minimum Wage, and to introduce a mansion tax on homes worth more than £2m.

The party's Fairer taxes policy paper also stated that the party recognises 'in principle' the merits of moving to a single rate of relief, rather than one based on the level of income tax paid.

However, there were 'significant practical obstacles to such a proposal', particularly in respect of how to apply such a system to defined benefit schemes. Therefore, the party would campaign for a lowering of the lifetime cap as 'a more effective way of restricting the pension tax relief given to the wealthiest'.

This article appeared in our September 2013 issue of The Actuary.
Click here to view this issue
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Topics:
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