Government seems to rule out flat rate of pension tax relief

The Government’s response to the Treasury Select Committee report on ‘Household finances: income, saving and debt’ appears to rule out any imminent change to a single rate of pension tax relief and dismisses calls to scrap the Lifetime ISA.

In July, the Treasury Select Committee report included the argument that pensions tax relief, the main financial incentive the government provides for long-term saving, was not an effective or well-targeted way of incentivising saving into pensions. The Committee called for fundamental reforms including replacing the lifetime allowance with a lower annual allowance, introducing a flat rate of tax relief and promoting understanding of tax relief as a bonus or additional contribution.

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