The UK prime minister is concerned that the many Conservative MPs who favour Brexit will react unfavourably to big changes on tax relief for pension contributions, and therefore add to his political difficulties, according to sources quoted by the Financial Times.
Osborne and Cameron are instead looking at a ‘middle way’, which includes a rebranding of tax relief as government top-up payments, the FT reports.
Many of the life companies, asset managers and specialists in the pension arena have argued the case for a flat rate of 33% upfront tax relief giving more help to those on lower incomes yet still making pension saving appealing to higher earners who would still benefit from a tax-free lump sum at retirement.
John Corbyn, head of specialist products at Axa Wealth International, said at International Adviser’s offshore bond workshop last week that the life companies had been to see Osborne about this issue.
“I think flat relief will come in. The word is George Osborne wants a 25% rate”.
He said he expected changes in the March Budget to be “a real challenge” going forward.
