Following rumours of proposed changes to pension tax relief, the Government’s newly-appointed Secretary of State for Work and Pensions has indicated that such reforms are unlikely to go ahead.
Previously, it was thought that pension tax relief would be reviewed by the new Government, after a House of Commons briefing paper estimated that the cost of the existing relief for the Government chimes in at approximately £21.2bn.
However, plans to change pension tax relief were eventually excluded from the Conservative manifesto ahead of the General Election – and the issue of whether any changes are likely to go ahead in the near future has been up in the air ever since.
Previously, former pensions minister Steve Webb indicated that the reforms were unlikely to go ahead due to the Conservative party’s failure to secure an overall majority vote in June.
He said: “Changes like the introduction of a flat rate of relief are probably off the table. Instead, we are likely to see more ‘salami-slicing’ of limits, with a cut to the Annual Allowance particularly likely.”
But in recent days, new Secretary of State for Work and Pensions, David Gauke, has indicated that ‘no fundamental changes’ are likely in the near future.
When posed with the question of whether the reforms would be brought back now that the Election has passed, Mr Gauke said: “The idea of reforming tax relief was somewhat daunting in [the] last Parliament.
“I don’t expect to see any fundamental change.”
His comments have been welcomed by numerous pension providers, many of whom have voiced concerns that the UK’s pensions framework has already witnessed many changes in recent years, and that a tax relief shake-up would be unsuitable at such a time of political uncertainty ahead of Brexit negotiations.