Lib Dems call for Budget cut in pension tax relief for anyone on £60,000

Taxpayers earning £60,000 would be stripped of higher rate pensions tax relief under radical plans that the Liberal Democrats want included in the Budget.

One of Nick Clegg’s closest allies last night stepped up demands that George Osborne raise the threshold at which people start paying income tax to £10,000.

In a move that will worry middle-class families, David Laws said the Lib Dems would pay for the move by halving the higher rate of tax relief on pension contributions from 40 per cent to 20 per cent.

The former Cabinet minister said the Lib Dems would target the top 5 per cent of earners, which equates to those earning around £60,000 and above. He also signalled a wholesale assault on higher earners, as the Lib Dems seek to axe a host of tax reliefs and allowances.        More