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Danny Alexander commits to curbing high rate of tax relief on pensions

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The Government looks set to debate pensions tax relief ahead of next month’s Budget statement, with senior Liberal Democrats committed to restrict or scrap the higher rate of pensions tax relief.

The chief secretary to the Treasury Danny Alexander (pictured), said in an interview with The Telegraph that, in an age of austerity, the Government could not afford to keep giving the high rate of tax relief.

Alexander told The Telegraph that scrapping higher rate pension tax relief altogether would save the Government £7 billion whilst scrapping it for those earning over £100,000 would save £3.6 billion.

It seems most likely people who earn more than £100,000 in salary, could see their higher-rate tax cut on their pensions.

He said: "If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate

For people with "very large incomes who are paying very large pension contributions, "he added, "the country cannot afford to give you all the tax relief."