Tax relief reform 'attractive' for chancellor in Autumn Statement

Michael Klimes
clock • 2 min read

A single rate of tax relief could be "far too attractive" for chancellor Philip Hammond to not consider introducing through his Autumn Statement, says public policy expert Iain Anderson.

The Cicero Group director and chief corporate counsel spoke at the Legal and General Investment Management (LGIM) annual defined contribution (DC) conference on 14 September.

A flat rate could unite the need to generate revenue for the Treasury and the narrative Theresa May adopted just before she became prime minister on 13 July, Anderson said.

In a speech on 11 July, when she launched her campaign, May said she wanted to "build a country that works for all" and "not for a privileged few".

Anderson said there could be a connection between what pensions policy is adopted in the 23 November Autumn Statement and May's rhetoric: "On the pensions question I think he [Hammond] is of the idea that in the context of this new government, but also in the context of the work done before [on pensions taxation]; reform to pensions tax relief actually fits with the narrative. It also potentially gives him an awful lot of money [to put] back into the system. It could be far too attractive."

Hammond  (pictured above) would also need to generate headlines showing he is not just concerned about high earners, Anderson added.

A spokesman for the Treasury said: "We do not comment on speculation ahead of a fiscal event. Changes or otherwise will be set out by the chancellor in his statement."

It comes after Hammond's predecessor George Osborne dropped plans to reform tax relief in his March Budget after facing backlash, although this was expected to only be a temporary reprieve.

Osborne had been expected to introduce either a pension ISA style system which would end tax relief on contributions, or a flat rate of tax which would reduce tax relief for higher earners. While both drew criticism from across the industry, a flat rate was perceived as the least worst option.

In terms of automatic enrolment, freedom and choice, pensions guidance and the lifetime ISA, Anderson said he thought it would be just business as usual.

But there has been "a bit of a rolling back" on the secondary annuities market, he continued.

 

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