Ndubuisi Egwim breaks down Labour's proposed pension tax changes. A £10,000 contribution currently gives a 40% taxpayer £4,000 relief; under a flat 30% rate, it drops to £3,000. Labour may also bring pensions into inheritance tax, which would reshape how wealth passes to the next generation.
October 18, 2024.
£4,000 (40% relief).
£3,000 (30% relief).
October 30.
For example if you are saving 10,000 into your pension you currently benefit from let's say £4,000 in tax relief if you're a higher rate taxpayer because it's 40%. Now if labor implements a flat rate relief of 30% you only receive £3,000 in relief. And this might not sound like a huge difference but over the years think about 20, 30 years of working. It can add up quite a bit especially for high income earners. Alright number five, the inheritance tax changes. Right now pensions fall outside your estate for inheritance tax probably and it allows you to pass it on tax free to your family. But labor might bring the pensions into the scope of inheritance tax or reduce tax free pension withdrawals. This would be a significant blow to those planning to leave some wealth to future generations. So these are a few potential changes. Remember nothing is confirmed till October 30 but what can you do even with all this.
