Ministers are drawing up plans to raid the pension contributions of higher earners to help pay towards lifting everyone earning under £10,000 out of tax
Ministers are drawing up plans to raid the pension contributions of higher earners to help pay towards lifting everyone earning under £10,000 out of tax.
Workers currently receive tax relief on the money they pay into their pensions, up to a maximum of £50,000. But under controversial plans being discussed by the “quad” at the heart of the coalition – David Cameron, the prime minister, Nick Clegg, his deputy, George Osborne, the chancellor, and Danny Alexander, the Treasury chief secretary – this upper limit would be reduced, with potential savings of billions of pounds.
For higher earners, the move will feel like a tax rise: those paying the top rate of 50 per cent can claim relief of up to 50 per cent on their pension contributions, meaning that for every £1 they put into their pension pots, the government tops it up with an extra 50p.
One person close to Mr Osborne said: “This is being looked at, it is definitely a good way to be able to raise money to get towards the £10,000 tax rate.”
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