Cuts to tax relief high earners can claim on pension contributions will be used to fund an increase in the inheritance tax threshold, George Osborne has confirmed.
In today's emergency Budget, the Chancellor said the government would go ahead with plans to reduce tax relief for those earning more than £150,000.
As proposed in the Conservative manifesto, 50p of tax relief will be lost for every additional pound earned between this threshold and £210,000, down to a minimum of £10,000.
Osborne said this would fund the government's inheritance tax giveaway.
He said:"The result [of the inheritance tax changes] for families will be that you can pass on up to £1m onto your children free of inheritance tax.
"This cut will be more than paid for by the changes to tax relief we have set out for the highest earners. From next year their annual allowance will be tapered away to a minimum of £10,000."
Before the general election, however, the Institute of Fiscal Studies questioned whether the policy would raise the money the Conservatives expected.
The think tank pointed out the measure would to some extent bring forward tax revenues rather than increase them.
Commenting on the announcement, Association of Consulting Actuaries (ACA) secretary Bob Scott said: "We are disappointed that the government has decided to add further complexity to an already complex system by reducing pension tax relief for high earners.
"We called for a calm review ahead of any further changes in this Budget because the application of the tax has become both terribly complex and riven with anomalies. What we have got is a green paper looking at the future of pension tax relief after this latest tax increase."
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