𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The Chancellor has been warned that a tax raid on pensions in the Autumn budget would be a “dangerous gamble.” It is widely reported that Rachel Reeves will have to raise taxes later this year as she struggles to plug holes in the nation’s finances following the Government’s failure to push through changes to welfare payments.

Fears that pensioners could be taxed to help fill the Treasury coffers have not been dampened by the pensions minister Torsten Bell saying this week that the Government offers tax relief worth £70bn every year to encourage people to save, whilst refusing to rule out a raid. In another ominous admission, Bell discussed the Government’s desire to ensure that people are not “taxed twice” through their pensions. He said: “What does the pension tax system do? It makes it easy for people to smooth their incomes over their lifetime. We’re not taxing you twice. That is an important feature of most tax systems, and it will remain an important feature.”

Arjun Kumar, founder of Taxd warned that whilst taxing pensioners would boost the nation’s coffers, it would ultimately be a “dangerous gamble with Britain’s future”.

The tax expert also warned that raiding taxes could discourage people from saving for their future and ultimately cost the country more in the long term.

According to GB News, tax advisers across the UK say they have seen unprecedented activity as pension savers scramble to maximise their contributions before potential changes to tax relief rules.

According to HMRC, £12.8bn of individual contributions were made to pension pots in 2022/23.

The data also shows that had overall pension contributions been subject to income tax, the Treasury would have raked in an additional £46.8 billion.

The Institute for Fiscal Studies (IFS) has urged the government to consider taxing employer pension contributions as a means of generating much needed funds.

Carl Emmerson, the deputy director of the IFS believes that subjecting employer contributions to a National Insurance levy would be “a very generous and very opaque subsidy” that could generate as much as £17bn.

He said: “It would almost certainly put downward pressure on pay, and would also make Government spending less generous because lots of public sector workers get generous employer pension contributions, and those public sector employers would find their national insurance bills going up.”