George OsborneOlivia Harris/PA Wire

George Osborne is set to make his autumn statement in less than a month. He's still looking to raise a massive amount of cash - by increasing tax or reducing spending. It means that tax reliefs are more under threat than ever. The experts have been busy making their predictions as to what tax relief will be for the chop.

So what are their predictions, and what does that mean for us right now?


Pension pain

By far the most common prediction is that something is going to happen to tax relief on pensions for higher earners. There are a number of reasons for this. First, Osborne is under pressure to raise more cash, and this is a cash cow that hasn't yet been milked.

The other reason is political: the Liberal Democrats have been pushing for it in return for their support on a number of austerity initiatives that they have found particularly damaging. It was something Danny Alexander raised in February, and then Nick Clegg spoke to the Lib Dem conference about this year - so we know he will be pushing for this step.

Lord Newby, co-chair of the Liberal Democrat Treasury Parliamentary Committee said in a pamphlet for the CentreForum think tank: "It surely should not be the role of the state to help the already well-off enjoy an affluent retirement, particularly when it struggles to provide a half decent basic pension to many of its citizens."

The cry has been taken up by the Centre for Policy Studies - which says it should go in favour of other pension incentives to benefit all savers - as opposed to being limited to the richest ones.

Opposition

Meanwhile, it has been opposed by a number of other groups. Otto Thoresen, Director General of the Association of British Insurers (ABI), has said it would be double-taxing savers. He added: "In Opposition, George Osborne repeatedly stressed he would be a pro-savings Chancellor. At this very difficult time for savers, he needs to live up to his promises and resist the temptation to view pensions as an easy, short-term hit."

Meanwhile the National Association of Pension Funds has warned that it would create massive upheaval in the industry and do untold damage to pension saving.

What it means

While the argument rages, it's worth considering what it would mean. There are a few ways in which they can attack this allowance. The first will be to remove the higher rate tax relief on pension contributions - so that regardless of what rate you pay on your income, you only get relief at the basic rate. The alternative is to restrict the total amount you can get tax relief on - possibly by restricting tax relief for those who earn over a particular sum of money.

The Lib Dems say that removing the higher rate would save the government over £7 billion - while restricting the tax relief available to those earning over £100,000 would save £3.6 billion.

It's food for thought for higher-rate taxpayers - who have until the announcement on 5 December to start planning.

What can you do?

We won't know whether or not this will actually happen until on the day - and it has been repeatedly predicted for the last couple of years to no avail. In the Budget last year Pricewaterhouse Coopers estimated that the odds of reducing pension tax relief were 15-1.

However, we can't rule it out as a likely option, and therefore higher rate taxpayers may want to get in extra contributions to their pensions while the going is good.

Steve Latto, Head of Pensions at Alliance Trust Savings, commented: "Pensions are one of the most tax efficient savings vehicles available in the UK. Tax relief on contributions helps boost your pension fund with the added advantage that higher and additional rate taxpayers can claim further tax relief via their self-assessment. With higher rate relief under scrutiny, particularly for those earning in excess of £100,000, the ability to receive tax relief of up to 60% on pension contributions may be short lived."

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