Targeting Pensions in the Budget
Chancellor Rachel Reeves may cut the amount individuals can pay into pensions each year in the upcoming Budget, according to speculation in the profession.
Sean McCann, a financial planner at NFU Mutual, has identified four potential ways Reeves may target pensions. Notably, almost 70% of all pension tax relief benefited higher rate and additional rate taxpayers in 2023-24, based on HMRC data analyzed by the firm.
Possible Pension Reforms
- Lowering the cap on pension contributions: Currently set at £60,000, reducing it to £25,000 would significantly impact 40% and 45% taxpayers.
This change has the advantage of being simple to introduce from an administrative perspective.
Author's summary: Chancellor Rachel Reeves may reform pensions.