Will the high level of government spending during COVID lead to a raid on pension pots? — Hoxton Capital Management

Will the high level of government spending during COVID lead to a raid on pension pots?

Plans laid out by the treasury to fill the hole left in public finances from their spending over the pandemic, include a number of changes that could lead to higher earners being substantially worse off in their retirements.

The three key reforms that are being considered are as follows:

Limiting tax relief on pension contributions to a flat rate of 30%.

Currently, tax relief is paid at a person’s marginal rate of income tax. This means that if your income tax rate is in the higher 2 brackets of 40% or 45%, you would see a reduction in the relief you receive on pension contributions by 10–15%.

However, the majority of people who are earning in the lower tax thresholds would stand to benefit from this change. For example:

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Originally published at https://hoxtoncapital.com on June 23, 2021.

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Hoxton Capital Management is a borderless, independent financial advisory consultancy. www.hoxtoncapital.com

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Hoxton Capital Management

Hoxton Capital Management

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Hoxton Capital Management is a borderless, independent financial advisory consultancy. www.hoxtoncapital.com