Shabana Mahmood, the current frontrunner to become Chancellor, has previously backed slashing pension tax relief for higher earners, which could raise £22billion a year by 2029. However, experts warn that this could hit millions of public sector workers and deter people from saving into their pensions.
A tax raid on pensions which would give Andy Burnham £20billion could follow if Shabana Mahmood is made chancellor, it was warned last night. Ms Mahmood, current frontrunner for the job, has previously backed slashing pension tax relief for higher earners, arguing it was needed to fund spending plans.
Cutting the tax relief has often been cited as one of the few large revenue-raisers still available to the Treasury, but chancellors are reluctant to use it. However Ms Mahmood backed the move in a Commons debate when she was a shadow Treasury minister under former Labour leader Ed Miliband. During a discussion about taxing bankers' bonuses in February 2015, Ms Mahmood said: This tax, alongside a restriction on pension tax relief, would fund a compulsory jobs guarantee.
The Institute for Fiscal Studies estimates capping pension tax relief at the basic rate of 20 per cent could raise as much as £22billion a year by 2029. But a report by the think-tank ahead of last year's Budget warned it should be avoided as it could hit millions of public sector workers including teachers and nurses. Last night Robert Jenrick said Ms Mahmood has form on backing a tax raid on pensions as he warned savers should be worried.
Shabana Mahmood has previously backed slashing pension tax relief for higher earners to raise revenue Mahmood, pictured embracing Andy Burnham after he was anointed Labour leader yesterday, is one of the frontrunners to become Chancellor The Reform UK Treasury spokesman said: Shabana Mahmood has long dreamed of taxing people's pensions. This is not a tax on the super-rich - they will restructure around it within a week.
It is a tax on the nurse, the teacher and the police officer who spent their careers building a pension they were promised would be theirs. They deserve to know, before the Budget and not after it, whether the incoming chancellor still believes what she said. Currently, those who save into a pension do not pay tax on those savings as pension contributions are only taxed once - at the time they are withdrawn from the pension.
Experts have warned any raid on pension tax relief would deter people from saving into their pensions and hit public sector workers on pension schemes
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