Currently £100 going into a pension costs a basic rate taxpayer £80, but a higher rate taxpayer only £60.
It is widely rumoured that the chancellor is about to change that, introducing a single rate of tax relief whatever your income tax band.
This is good news for basic rate taxpayers and makes pensions more tax beneficial for them.
Higher rate taxpayers won’t get as good a deal going forward although it will still be tax efficient for them too.
If this happens, it is a good opportunity to consider whether the couple has the balance right regarding who is paying how much into their pension.
If one partner is a basic rate taxpayer and the other higher rate, it may be worth considering increasing contributions for the lower earning partner.
Steven Cameron is regulatory strategy director at Aegon
