The rumours of a possible cut to higher rate tax relief have been gathering pace in the last six months, particularly as senior aides to the Chancellor have recently suggested plans are at an advanced stage.
Currently basic rate tax payers receive 20 per cent tax relief, higher rate tax payers receive 40 per cent and top rate tax payers 45 per cent.
In the Budget in March, George Osborne is expected to announce all those paying into a pension would receive a flat rate of tax relief of between 20 and 30 per cent.
Research by the Pensions Policy Institute suggests that a flat rate of 25 per cent tax relief would save the Treasury some £6.1billion per year. Senior doctors on the other hand would see a significant drop to their retirement pots if the change goes ahead.
Many savers are choosing to make larger one-off pension contributions before March but you must be careful not to trigger a lifetime allowance charge. This limits the total amount you can put into your pension tax-free at just £1million from April.
How will your retirement plans be affected? To discuss the best strategy for your overall financial plan, please contact one of our advisers on 020 7636 7006.