It seems increasingly likely that the budget in April will be looking to introduce changes to pension taxation, with the smart money being on changes and maybe the abolition of tax relief on pension contributions. The financial press has been full of articles arguing whether this is a good or bad thing, and whether this is a necessary change or just more legislation.
It is undeniable that the cost of pension tax relief is one of the larger burdens assumed by the treasury. In 2014, the gross pension tax relief on contributions and investment growth for both personal and occupational pensions was £34.3 billion. This was offset by a £13.1 billion receipt of tax on pensions currently in payment. That is a lot of money tempting a chancellor in need of funds. It is certainly conceivable that the chancellor will simply reduce and abolish tax relief without looking to replace it.