Sajid Javid contemplates raiding high earners’ pensions in March Budget
Sajid Javid is considering a shake-up of pension tax breaks to help fund Boris Johnson’s spending plans, it has been reported.
In a move that is likely to impact traditional Conservative voters, the Chancellor is set to introduce long-considered plans to reform pension tax relief.
The current system costs the Treasury around £40bn a year and mainly benefits richer people as those who save into a pension receive tax relief at the same rate as their income.
But Mr Javid is considering cutting the rate, from 40 per cent to 20 per cent, which would raise more than £10bn annually for the Treasury.
The Chancellor’s allies told the Financial Times that he was committed to making the tax system “fair and efficient”.
It will also be seen as proof of Mr Johnson’s determination to please newly-won northern voters if he is willing to raise taxes on traditional Conservatives in the party’s southern heartlands.
A planned corporation tax cut from 19 per cent to 17 per cent has already been abandoned by Mr Johnson to free up extra funds for the NHS.
One Treasury insider told the FT: “Saj is not 100 per cent convinced. It’s a live debate.”
Richard Holden, the new Conservative MP for the former Labour stronghold of North West Durham, said: “Cutting taxes for working people is the top priority. I’m sure it will be a Budget for the north.”
Tom McPhail, head of policy with Hargreaves Lansdown, told the FT: “I think the Government today would find it easier to push through changes, partly because the sense of social equity is much stronger than it was.”