Chancellor George Osborne has said that the 50% tax rate for high earners will stay put for the moment, but it will be temporary.
The tax, introduced by the former Labour government in April 2010, means those that earn more than £150,000 a year pay 50p tax on every pound they earn higher than that amount.
In his Budget speech, Osborne said that if the 50% tax rate was retained, it would cause lasting damage.
Roger Breeden, head of Mercer’s personal finance planning business, said that higher earners should pay more into pension contributions at a time when they can still attract tax relief at 50%. “It might be a good year to make pension savings”, he said.
Breeden, however, acknowledged that some high earners may be restricted by changes to pensions tax relief, including the reduction of the annual allowance to £50,000.
For more articles on the Budget’s impact on benefits