Could the £50,000 pension annual allowance be cut? Last year the Coalition trimmed the annual higher-rate tax relief pension allowance from £255,000 to £50,000.

That's still a lot of money to be invested every year in a pension. But it's thought George Osborne and the Treasury are now minded to clip further and deeper, saving billions.


Higher earners targeted

It's thought the annual allowance could still be snipped to between £30,000 and £45,000 according to the Financial Times. More information, clearly, will be revealed when the Chancellor reveals his Budget on 21 March.

Pensions analyst Laith Khalaf from Hargreaves Lansdown told AOL Money that the mood within the Treasury is definitely veering towards more pension allowance cuts. "I think it is a tempting prospect for them. They're currently embarking on the largest reforms to pensions that has ever been taken with auto-enrolment. I don't think they will cut [it] but it's possible."
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Pay in quick

He added: "If you're thinking of making extra contributions, I would get it in before the 21 March, just in case". Certainly the Lib Dems have made no bones about their objections to the tax. They would like the cutting of this relief to pay for a rise in the income tax threshold to £10,000.


It's thought that getting rid of higher rate tax pensions relief completely would save the government £7bn a year. More broadly, taxpayer personal allowances, including tax credits, is a huge government expense - close to £30bn a year.

However there are numerous practical challenges for the government in clawing the tax relief back, particularly with automatic employer contributions.

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