Govt 'scraps' pension tax relief cut proposal

The government will scrap plans to cut pension tax relief for higher earners to avoid alienating back bench MPs, according to reports.

Initially reported in The Times, new Chancellor Rishi Sunak has shelved the idea as too many Tory MPs were strongly against cuts to pensions tax relief, while some critics had concerns that changes would be too complex to implement in the short term.

Speaking on the BBC’s Andrew Marr Show, former Brexit secretary, David Davis, branded the proposals a “moral disgrace and an economic farce”.

Davis commented that the current total tax burden was at about the “third highest since the war”, adding that taxes were “incredibly high already, so we don't want to be pushing it up”.

Under the tenure of former Chancellor Sajid Javid, rumours spread that the March budget would include plans to slash tax relief on pension contributions for those earning £50,000 or more per year from 40 per cent to 20 per cent.

The move could have potentially raised more than an extra £10bn a year for the government.

However, Javid, who was appointed as head of the Treasury in July 2019, resigned from his post during Prime Minister Boris Johnson’s cabinet reshuffle after refusing to fire his team of special advisers.

The budget remains set to be released on 11 March despite concerns that Javid’s resignation could lead to delays.

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