Chancellor of the Exchequer Sajid Javid is weighing up a raid on higher earners by cutting pensions tax relief, the Financial Times reports.
Treasury insiders told the paper he plans to help fund Boris Johnson’s plan to “level up” the economy in his 11 March Budget.
Restricting the tax relief on pension contributions to 20 per cent (compared with 40 per cent for higher rate taxpayers currently) could save more than £10bn extra a year.
The Treasury said: “We don’t comment on speculation. All taxes are held under review and any changes are announced by the chancellor at the Budget.”
AJ Bell senior analyst Tom Selby says the constant speculation risks altering investor behaviour and “damaging confidence” in the stability of the system.
“Ironically, in the short-term such stories will inevitably cost the Exchequer cash as savers pile into pensions to make the most of tax relief while it is still there,” he says.
“We believe the focus at the moment should be improving the existing system rather than burning the whole edifice to the ground.”
George Osborne was the last chancellor to try to reform pension tax relief, but abandoned the plan in 2016 after the media warned that middle class savers “could lose a third of their pensions” through the tax changes proposed.