Chancellor George Osborne has abandoned Budget plans to implement a radical reform of the tax relief system for pension contributions.
One of Mr Osborne’s proposed changes would have resulted in the abolishment of upfront relief, but would have made withdrawals from individuals’ pension pots tax-free.
Another adjustment that had been under consideration was the introduction of a flat-rate system of tax relief, which could have potentially benefitted basic rate taxpayers.
Additionally, many had speculated over the Chancellor’s plans to introduce a ‘pensions ISA’ within the upcoming Budget on 16 March.
However, some had expressed concerns that any alterations to pension tax relief could have resulted in savers being left worse off, whilst raising significant amounts for the Treasury.
A Treasury official revealed that it was ‘not the right time’ to implement any changes to the relief, stating that Mr Osborne had altered his stance as he ‘has always been clear that he wouldn’t do anything to damage saving’.
The source continued: ‘He’s listened to what people have said and concluded that now isn’t the right time, with uncertainty in the global economy and reforms such as auto-enrolment still bedding in, to turn things on their head’.
The Chancellor will present the 2016 Budget on Wednesday 16 March.