Pensions tax relief may be in the firing line in the upcoming Autumn Budget, with growing concern among financial experts that HMRC is targeting popular salary sacrifice schemes as a way to raise revenue.
According to Blick Rothenberg, a leading audit and tax advisory firm, a new HMRC report points to the Treasury’s increasing focus on pension perks — including suggestions that salary sacrifice schemes could be significantly curtailed or even abolished.
Tomm Adams, a partner at the firm, said: “HMRC has just published a report suggesting that the Treasury has pensions in its crosshairs this Autumn. It explores ways to butcher salary sacrifice arrangements, or go even further by abolishing pension tax relief altogether.”
He added that the pensions industry was alarmed by what he described as a short-sighted approach that prioritises short-term tax receipts over long-term financial stability. “Those of us who care about the general population’s retirement prospects are appalled. This would sacrifice tomorrow’s security for today’s gain.”
Salary sacrifice arrangements have long been used by both employers and employees to boost pension contributions in a tax-efficient way. Under the scheme, an employee agrees to reduce their salary, with the equivalent amount instead being paid into their pension — which reduces both income tax and National Insurance contributions (NICs).
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