Balls to restrict pension tax relief for wealthy

SHADOW chancellor Ed Balls confirmed yesterday that a future Labour government would cut tax relief on pensions, reducing the refunds available to higher-income taxpayers.

Balls’ speech on Monday said that removing tax relief for “the very highest earners” would save enough to pay for a compulsory jobs programme, which would apply to young and long-term unemployed people.

The plans were hinted at in March last year, when Ed Miliband suggested that pension tax relief for those in the very top tax bracket should be cut to 26 per cent, down from the 50 per cent rate that was in place until earlier this year.

Along with the abolition of the highest rate of tax relief for pensions, Balls added that the winter fuel allowance would not longer be granted universally, regardless of income.

It was unclear whether Balls’ plan for eliminating tax relief at higher income levels applied only to those earning over £150,000, who pay the additional rate of 45 per cent income tax, or whether it would also apply to some paying only the 40 per cent rate, which kicks in at just over £41,000.

Earlier this month, at the Liberal Democrats’ annual conference in Glasgow, members of the party voted for a cap on the amount that an individual can accrue in pension tax relief over a lifetime to £1m.