A crying shame

Deep dismay among fat cat mandarins who have only just realised that prime minister Gordon Brown plans a hefty new tax on their gold-plated public sector pensions. Some can expect demands for an extra £20,000 or £30,000 in tax. (Yes, I know GB may soon be out on his ear but this is the kind of tax-raising wheeze all parties will keep.) Everyone knows about plans for a 50 per cent tax on pay packets of more than £150,000. The latest figures show nearly 40 top people in Whitehall are in this category. The bad news for these plutocrats is that soon the amount that we taxpayers put into their pensions is going to be added to their basic salaries by HM Revenue and Customs. HMRC will then sting them for everything over the £150,000 ceiling.

Up to now the pension money has been tax-free. From next year HMRC will decide what the "deemed" amount going into their pensions should be. For moneybag mandarins nearing retirement the "deemed" amount could be 50 per cent of their pay, even though officially the average contribution made by us to public sector pensions is 15 per cent. As independent pensions expert John Ralfe says: "It'll be much harder now to pretend that the cost of taxpayers' contributions to public sector pensions is only 15 per cent. The real average cost is nearly double that."

It's not just the public sector. The new rules will apply to the private sector too. They were announced in the last Budget though there's been little public discussion of them - hence the eye-watering surprise for the mandarins. HMRC reckons it will catch 300,000 people in all. What? Lost your violin? Me too.

sue.cameron@ft.com