Labour's income tax plans could affect pensions

Trustees Agenda posted on 9 May, 2017

Labour party proposals to increase income tax for those earning over £80,000 would have "significant implications" for retirement savings, according to Hargreaves Lansdown.

Head of Policy, Tom McPhail, commented "Tax relief on pensions is based on income tax rates, so the more you earn, the more tax relief you can get on your pension contributions. Given the ideological leanings of this Labour party, it is hard to see them being relaxed about actually increasing pension tax relief for higher earners. This means we'd be likely to see the annual allowance taper threshold brought down to £80,000."

Hargreaves Lansdown estimates that bringing the taper down to £80,000 from £150,000 would affect 1.2 million people.