“It’s understandable that the Chancellor isn’t in a position to set long term taxation policy while facing up to future uncertainty over economic impacts of the next phase of the pandemic. However, if he does have radical reforms in mind, be they on pensions tax relief, wealth taxes or aligning taxes between employees and the self-employed, he now has an opportunity to consult with other interested parties so that any decisions in a Spring Budget are fully thought through, avoid unintended consequences and can be implemented more quickly.
Fundraising measures
“Many of the changes to taxes or reliefs that have been mooted as potential sources of additional revenue for the Treasury are extremely complex and require careful consideration. If you take tax relief on pensions as one example, there are significant complexities as to how the potential removal of higher rate tax relief would be applied, particularly in defined benefit schemes or for those using ‘salary sacrifice’ to pay their pension contributions. Both individuals and employers will want to know what this could means for their pension planning and we certainly need to avoid a two tier system with differences in how reliefs are applied to defined benefit and defined contribution.
Triple lock state pension
“The government this week introduced a technical bill which allows them to increase state pensions even though earnings have fallen. This suggests an increase is on its way but it would be dangerous for state pensioners to bank on a 2.5% increase until the Chancellor has signed this off from a funding perspective.
Social care
“Outside of Budget considerations, there are other pressing Government priorities which we can’t afford to let slip. Finding a new and sustainable solution to funding social care is one. Depending on your perspective, this is either too big to tackle or too big to delay but surely there’s widespread agreement that it’s far too big to ignore.”
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