The Liberal Democrat Party has called for a review of pension tax relief.
In its manifesto published today the Party said the current system, where people receive tax relief on pension contributions equivalent to their marginal rate of income tax, is not encouraging people to save.
As such the manifesto put forward proposals for a review of tax relief on pension contributions, which would look at introducing a flat-rate of relief.
‘We will establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be designed to be simpler and fairer and would be set more generously than the current 20% basic rate relief,’ the manifesto said.
Yesterday Labour told New Model Adviser® it has no plans to reform tax relief, despite plans to change the income tax bands so that people earning £80,000 or more will pay a 45% rate of income tax.
The Liberal Democrats also called for the triple lock to be maintained through the next parliament – a proposal which Labour also backed.
Elsewhere in the manifesto the Lib Dems said it wants to expand the ‘Financial Conduct Authority’s remit to include a statutory duty to promote financial inclusion as one of its key objectives’.
The Party also called for a reverse of a number of ‘unfair’ Conservatives tax cuts and adjustments, including the cutting of corporation tax from 20% to 17% and the raising of the inheritance tax threshold.
The manifesto also called for a scrapping of dividend tax relief.
The Party also pledged to carry out a ‘full-scale review into the burden of taxation and spending between generations to ensure that government policy promotes fairness between generations’.
In order to fund the NHS and social care, the Lib Dems called for a ‘dedicated health and care tax on the basis of wide consultation, possibly on a reform of National Insurance contributions, which will bring together spending on both services into a collective budget and set out transparently, on people’s payslips, what we spend on them’. The manifesto also said income tax rates would rise by 1p to fund healthcare.