30% are in favour of changing pensions tax relief

pensions_note_430Less than a third (30%) of employer respondents are in favour of changing the tax relief available on pensions, according to research by Hargreaves Lansdown.

Its survey of 345 employers also found that around half (53%) of those that support change favour a flat rate of tax relief, with 41% wanting a flat rate at a higher level than the basic rate of tax relief.

The research also found:

  • Over three-quarters (79%) of respondents that offer pension salary sacrifice are concerned it may be withdrawn.
  • 41% of respondents have given thought to alternative reward strategies for higher earners.

Nathan Long, head of corporate pension research at Hargreaves Lansdown, said: “Rumour of a move to flat rate tax relief on pension contributions will be unwelcome with employers who are not keen on further upheaval.

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“A flat rate could abolish pension salary sacrifice as we know it, as well as potentially introducing further tax on employer contributions. With any change potentially not being implemented until April 2017, to accommodate system changes, the government would probably have to introduce some immediate measure to stop higher earners from exploiting this last gasp opportunity. This could cause issues for any employers with bonuses payable in March should members wish to sacrifice them into the workplace pension.

“A flat rate of tax could still see a further fall in the annual allowance, potentially leaving employers with yet more work to do on finding alternative ways of rewarding their highest earners.”