The much lauded (or derided, depending upon your political stance) “Brexit Dividend’’ has reared its head again, in the wake of Teresa May announcing an additional £20 billion a year into the NHS from 2019/2020 – and pledging that the money we save from not being part of the EU will go towards that promised hike in spending.

Just how much that dividend might (or might not) be is being hotly debated, given that EU payments will continue during the transition period and there is also a “divorce bill’ to be negotiated and paid.

The Government itself has suggested that taxes for all will need to rise to help fund the increase, but which tax route will the Chancellor take?

In the immediate aftermath of the announcement it was suggested that a penny on the base rate of income tax or a more widely accepted hike in NIC contributions could be the favourite taxes to be increased – with perhaps any increase in NIC going to a separately allocated NHS fund.

Some routes will undoubtedly be easier to navigate through Parliament than others, especially when you have a wafer-thin majority, so might it be from adjustments to pension tax relief?

Remember: only a few years ago – 2015 in fact – George Osborne was paying close attention to yet more reform to the UK pensions system, both State and Private, and it is understood that Chancellor Hammond is very amenable to such reform.

After all pension tax relief in the UK accounts for almost £40 Billion of “lost revenue” every year for the Exchequer.

When Osborne was exploring his options, the key component of this potential reform was the removal of all higher rate tax relief for a large cohort of pension savers: tax relief on pension contributions of up to 60% is still available to those earning between £100,000 and £124,000 today.

In its place was a mooted introduction of a new single tax relief rate applicable to both basic rate and higher rate pension savers; and whilst certain rates were quoted in the press, the general range for the uniform tax relief rate was somewhere between 25% and 30%. 

At the lower level it was calculated that the saving to the Exchequer could be as much as £10 – £15 Billion per annum. That would go a long way towards plugging the NHS gap, and would also be seen as asking those on higher incomes to shoulder a large chunk of the bill.

Government consultation on pension reform was at an advanced state back in 2016 but – as with so much other Governmental business – the complex and time-consuming Brexit negotiations has stalled or killed off consultation regarding reform.

Now, however, that money needs to be found in a hurry – and further pensions reform could be back on the table very soon… watch this space!

The only way to understand the implications for us as individuals is to be able to model and compare every single outcome. That’s impossible, but with a RetireEasy LifePlan at your fingertips you can get a much better understanding of the impact (or otherwise) of significant movements in stock values and interest rates. And, because you are modelling these scenarios over up to 40 years, your long term finances may well be a lot less volatile than you might expect. It’s dead easy to do with RetireEasy’s portfolio of cash flow based LifePlan products.

If you have RetireEasy Premium, you will be able to save and compare scenarios. That way you will always be in possession of the information you need to make educated decisions about your future and to make some sense of this volatile world as it affects you personally