Budget 2009: Darling to hit high earners with 'Sir Fred' pension changes
The government is unlikely to target the pensions of higher-rate taxpayers in the upcoming Budget, experts believe.
Public outrage over the pension awarded to former RBS chief Sir Fred Goodwin, combined with a gaping hole in public finances, have led to rumours that higher-rate tax payers will lose some of their tax relief.
"I think there is political pressure for making the rich pay more," Mike Warburton, from Grant Thornton, said.
However, there would be a problem with slashing the tax relief from 40 per cent to 20 per cent for higher-rate taxpayers, Mr Warburton added.
"Some people may still be higher-rate taxpayers in retirement - so there would be no incentive to save more," he said.
BDO Stoy Hayward partner Nicolas Hughes agreed.
"I don't see this as a huge area of reform," he said.
But with an increase for higher-rate taxpayers on its way - the rate jumps from 40 per cent to 45 per cent in 2011 - the government may cap relief instead.
"I think they will limit the higher rate relief to 40 per cent, if anything, but this will be further down the line," Mr Hughes added.
Alistair Darling is probably going to want to make some sort of gesture toward taxing the rich, but the reality is that if revenues must be raised then they will have to come from all of us, he said.
But one possibility is the higher tax rate could be announced earlier, Mr Warburton warned.
"We now have the Conservatives saying they may not oppose this and that may give the government the confidence to bring it forward," he said.
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