Pensions - Articles - 'ludicrous' comments Menzies on pension tax relief

 “It’s ludicrous that the Government is on the one hand trying to encourage pension saving with the auto-enrolment rules, while on the other taking away the incentive for higher earners to provide for themselves in retirement. In my experience no one is prepared to invest into a pension without the tax relief. If there is no tax relief for pension contributions, you would be better holding the same investments in an ISA, as this would not be taxed.

 “One of the basic principles of our tax system set out by Adam Smith in the 18th Century is that a taxpayer should be certain about how much they have to pay. If these changes were to be implemented, the self-employed, including partners in a partnership, won’t have any certainty that they will be entitled to the full pension annual allowance until they have calculated their profits after the end of the tax year. This uncertainty wasn’t acceptable in the 18th Century; it shouldn’t be acceptable now.

 “If the Government wants to simplify the tax system, it should be looking to introduce a flat rate of tax relief at 20% so that all taxpayers get the same level of relief. At least then everyone would know where they stand.”