Reports in recent weeks have suggested it is likely pensioners will feel the brunt of Mr Sunak‘s economic measures, set to be announced in March’s budget. The Chancellor is looking at a variety of tax rises to raise funds, and pension relief is likely to be reduced according to experts. Paul Green, the CEO at Over50smoney, said this month: “Pensions are complex and their tax treatment has been under discussion for years.
“It looks highly likely that the Chancellor will reduce the amount of tax relief on pension contributions.”
Claims of such action have circulated for months, with Aegon pensions director Steven Cameron warning in August that ending higher rate pensions tax relief would be a “particularly harsh change”, but said it could happen.
At the time, he noted in his interview with the Mirror that we still don’t know for sure what Mr Sunak has planned.
Mr Cameron added: “With the full economic and financial implications of COVID-19 still far from clear, the Chancellor could legitimately defer announcing too many radical changes in November.
“Some changes such as to pensions tax relief are complex and launching a consultation in the Autumn on a variety of options could make sure any changes work across the full range of pensions, including defined benefit schemes, and avoid unintended consequences.”
A tax expert from Oxford University suggested that Mr Sunak would be wise to raise taxes on pensioners.
Professor Judith Freedman said in October: “If you are looking at broadening the base, people in receipt of pensions should be within your purview because they are not paying national insurance on those pensions.
“I don’t think it will be popular but I think it probably should be done.”
The Financial Times reported recently that Mr Sunak is planning to preserve the triple lock pension policy.
So far, the Government has spent around £280million fighting the pandemic, with borrowing expected to hit £400billion for the 2020-21 financial year, marking the country’s highest budget deficit outside wartime.
The Government has spent a lot through various job retention schemes.
Data from HMRC shows the number of furloughed employees increased by 1.3 million at the start of November, peaking at 4.1 million.
It dropped to 3.9 million by the end of the month, and estimates for December show it fell slightly to 3.8 million by the end of 2020.
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The scheme is estimated to have cost the Government £82billion.
Tax Research UK’s Richard Murphy told Express.co.uk in September that Mr Sunak “has killed his chances of being Prime Minister” because of his handling of the pandemic.
He said: “Rishi Sunak’s star is definitely over. His rising star, his moment of glory in August, is done.
“The Eat Out to Help Out scheme has clearly backfired, this will be enough to basically kill his chances of ever becoming Prime Minister.”