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Taxation: Pensioners

Volume 495: debated on Tuesday 30 June 2009

To ask the Chancellor of the Exchequer (1) what estimate he has made of the proportion of income tax relief on pension contributions which will accrue to (a) 45 per cent. taxpayers and (b) 40 per cent. taxpayers in 2011-12; and if he will make a statement; (269041)

(2) what estimate he has made of the cost to the Exchequer of the income tax exemption of pension contributions as a result of the introduction of the 45 per cent. tax rate from 2011-12 in the first 12 months of operation; and if he will make a statement.

The Government announced that the introduction in April 2011 of a 45 per cent. top rate of income tax will be replaced by a 50 per cent. rate applying to income over £150,000 from April 2010. This was accompanied by an announcement that tax relief on pension contributions will be restricted for those with incomes over £150,000. Relief will be tapered away so that for those with incomes of £180,000 and over it is worth 20 per cent. the same as to a basic rate taxpayer.

It is estimated that in 2011-12, around 13 per cent. of tax relief on individual and employee pension contributions will accrue to additional higher rate taxpayers and 49 per cent. will accrue to higher rate taxpayers.

Data on employer contributions are not available.