Possible reduction on tax relief on pension contributions

[paddy26]

If the Budget results in a cut on the tax reliefs on pensions contributions to a rate of say 35% how will this be implemented, particularly with self assessed individuals. Will they still have the option of making pension contributions at the higher rate until 31/10/2010 in respect of 2009?

Would it be possible that they maybe give 12 months for the change to be implemented.

I would appreciate peoples thoughts on this.

Paddy
www.SmartQuotes.ie

 

[Duke of Marmalade]

If this change happens it will apply for tax years 2010 and on. Unless they actually ban backdating (unlikely) any backdated contributions will continue to enjoy 2009 levels of relief.

This will be a very, very messy change to implement. Surely they wouldn't just hit the self employed. So all employees contributing to a scheme should get their tax relief changed from marginal to the new fixed rate.

And people on non contributory schemes or whose employer is contributing will get off free unless there is a deemed BIK. And pray who is going to calculate the deemed BIK on DB schemes?

This just ain't workable, doesn't mean they won't do it.

PS I note in today's Irish Times that Mary Hanafin says there won't be any change to the pensions regime until 2014.

 

[Duke of Marmalade]

Standard Life Ireland have said that a proposal to reduce the pension tax relief from 41% to 33% could mean 2,000 job losses.

This one is getting up steam but does the below quote from today's IT not scotch these rumours, or is Hanafin talking with forked tongue?

THE INTRODUCTION of a single rate of tax relief on pension contributions would save public money and would be fairer, according to a report from the Economic and Social Research Institute (ESRI).
The report estimates that between €500 million and €1 billion could be saved by changing the system of pensions tax relief.
Minister for Social and Family Affairs Mary Hanafin said changes to the pensions system would “take place in the context of the Nationals Pensions Framework”, which would have a lead-in period of at least a few years.
“We don’t want to do anything that might impact on competitiveness. Under no circumstances would we publish a plan with immediate implementation,” said Ms Hanafin, who suggested new measures could come into effect in 2014.

[broken link removed] getting in on the act, I see reference to a Program for Government.

[FONT=Arial,Bold][FONT=Arial,Bold]

Income Tax​

[/FONT][/FONT]

•​

We will abolish the employee PRSI ceiling in parallel with the reduction of
the temporary income levy in order to remove the inequity whereby higher
paid employees pay proportionately less of their income for social insurance
than lower paid employees.​

•​

We will begin the simplification and rationalisation of the various levies into
the income tax system beginning in 2010.​

•​

We will introduce a single 33% rate for tax relief on private pension provision​

in the context of the national pensions’ framework.

So how does this tally with Hanafin's statement that there will be no changes until 2014, the PfG doesn't quite say that the 33% is coming in 2010 but it seems to be saying this.