‘TAX RAID’ ON PENSIONS
Sunak taking aim at contributions Triple lock rises also under threat
RISHI Sunak is reportedly eyeing up tax hikes on pension contributions and axing the “triple lock” to plug the gaping hole in public finances caused by coronavirus.
Pension tax relief, which sees some of the money workers would normally pay in income tax added to their retirement pot, may be slashed.
Basic-rate taxpayers currently get 20% tax relief on contributions and higher rate taxpayers get 40%.
The proposals would cut in half the 40% rate enjoyed by around four million higher earners.
Mr Sunak has also hinted that he wants to end the triple lock, which guarantees a minimum 2.5% annual rise in state pensions.
With the national debt now more than £2trillion it is believed the Chancellor may also increase the amount of capital gains tax investors pay on the profit made when selling assets.
And corporation taxes – levied on the profits businesses make – could leap from 19% to 24%, with yet more cash being clawed back by cutting foreign aid, an inheritance tax revamp and a new online sales levy.
Steve Barclay, the Chief Secretary to the Treasury, refused to be drawn on what Mr Sunak is planning for his November Budget.
He said there will always have to be a “trade-off ” between decisions on spending and tax measures.
But he insisted: “Treasury ministers don’t get into what a Budget will or will not do. There is always four moving parts to this. The objective within the Treasury is to get growth. There is then a balance between debt, spending and tax.” Former Cabinet minister Damian Green, who was Theresa May’s de facto deputy PM,
said he would be concerned by any changes to the pensions triple lock after Prime Minister Boris Johnson pledged at last year’s general election not to touch it.
It sees state pensions rise in line with wages, inflation or by 2.5%, depending on which is highest.
Mr Green said: “I would be very wary of the Government going down that route. It was a manifesto commitment to keep it. Clearly, the Chancellor faces some unpalatable options because he has rightly spent many billions of pounds supporting the economy.”
But Mr Green said he would also be opposed to any further reduction in spending on foreign aid.
It has already been cut by £2.9billion from £15.8bn this year.
But the Government says it still meets its obligation to provide 0.7% of gross national income to international development.
The head of the British Chambers of Commerce, Adam Marshall, said he hoped suggestions of tax rises were simply the Treasury testing public reaction.
He warned: “We’ve got to give the recovery space to build and grow. If the Treasury snaps back to orthodoxy immediately it will be a really damaging mistake.”