Pensioners could be slapped with stealth tax raid as Rachel Reeves told to ask older Britons 'to pay more'
Economists are warning that Chancellor Rachel Reeves could launch a tax raid on pensioners following next week's Spending Review to pay for the Labour Government's funding commitments.Reeves is set to unveil £100billion in infrastructure investment and increased NHS funding on Wednesday, alongside claims of discovering billions in efficiency savings through comprehensive spending reviews.Despite these announcements, financial experts anticipate the Chancellor will need to implement tax increases in the Autumn Budget to meet growing demands for public service funding, with pensions and capital gains likely to be targeted.The Spending Review will see most Whitehall departments facing cuts, even as pressure mounts from Labour MPs and trade unions for enhanced public service investment.Reeves' allies maintain she will focus on economic growth rather than tax rises to generate additional revenue. While maintaining her pledge not to increase income tax, VAT or national insurance, Reeves has not ruled out other revenue-raising measures.Potential options include increasing capital gains tax (CGT), lowering the lifetime allowance threshold for pension pots, and limiting various forms of pension tax relief, the i reports.The Chancellor could also continue the existing freeze on income tax thresholds, creating a "fiscal drag" that draws more earners into higher tax brackets as wages increase.As incomes rise over a period of time when tax thresholds are frozen, taxpayers are finding themselves pulled into higher brackets and losing more hard-earned cash to HM Revenue and Customs (HMRC).Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.Thanks to the triple lock being in place, state pension payments at risk of crossing over the Personal Allowance threshold with older Britons likely to be taxed on payments alone for the first time.Trade unions are preparing a coordinated campaign advocating for wealth taxes targeting the richest individuals, with capital gains tax and levies on affluent pensioners amongst the proposals under consideration.Sharon Graham, the general secretary of Unite has called for the Chancellor to "fully reverse the cut to Winter Fuel Payment funded by a tax on wealth", stating: "The Government needs to learn that when you are in a hole, you should stop digging".The union campaign represents mounting pressure on Reeves to abandon her current approach and implement direct wealth taxation measures to fund public services. Labour MPs are increasingly advocating for higher direct taxation, with one stating: "I would like us to look at tax. When the public realm is in such a dire state, I am not sure having the lowest corporation tax in the G7 is the right priority."The MP added: "I think there's an automatic assumption that you say anything about raising taxes that people run away. LATEST DEVELOPMENTS:State pensioners could lose up to £70k in retirement savings due to 'frozen' triple lock policyState pension alert: 'Remove the triple lock' as retirees get £13k more than 'suffering' childrenNew pension rules to impact anyone with pots under £1,000 - are you affected?"I have had time and again people say to me: we are fairly happy with paying more, why don't you just ask us to pay some more income tax?' I think it really insults the electorate to think that they can't deal with that argument."Another Labour MP expressed concerns about efficiency savings, stating: "We know that austerity doesn't work so if we are looking at more efficiency savings then I am not sure we will deliver anything better. I want to see her signal ahead of the Budget that she will be looking at things like tweaking fiscal rules and taxation."A Treasury spokesman said: “The best way to strengthen public finances is by growing the economy. That is our focus and the key priority in our plan for change."Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms which are expected to grow the economy by £6.8billion and cut borrowing by £3.4billion."
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Economists are warning that Chancellor Rachel Reeves could launch a tax raid on pensioners following next week's Spending Review to pay for the Labour Government's funding commitments.
Reeves is set to unveil £100billion in infrastructure investment and increased NHS funding on Wednesday, alongside claims of discovering billions in efficiency savings through comprehensive spending reviews.
Despite these announcements, financial experts anticipate the Chancellor will need to implement tax increases in the Autumn Budget to meet growing demands for public service funding, with pensions and capital gains likely to be targeted.
The Spending Review will see most Whitehall departments facing cuts, even as pressure mounts from Labour MPs and trade unions for enhanced public service investment.
Reeves' allies maintain she will focus on economic growth rather than tax rises to generate additional revenue. While maintaining her pledge not to increase income tax, VAT or national insurance, Reeves has not ruled out other revenue-raising measures.
Potential options include increasing capital gains tax (CGT), lowering the lifetime allowance threshold for pension pots, and limiting various forms of pension tax relief, the i reports.
The Chancellor could also continue the existing freeze on income tax thresholds, creating a "fiscal drag" that draws more earners into higher tax brackets as wages increase.
As incomes rise over a period of time when tax thresholds are frozen, taxpayers are finding themselves pulled into higher brackets and losing more hard-earned cash to HM Revenue and Customs (HMRC).
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Thanks to the triple lock being in place, state pension payments at risk of crossing over the Personal Allowance threshold with older Britons likely to be taxed on payments alone for the first time.
Trade unions are preparing a coordinated campaign advocating for wealth taxes targeting the richest individuals, with capital gains tax and levies on affluent pensioners amongst the proposals under consideration.
Sharon Graham, the general secretary of Unite has called for the Chancellor to "fully reverse the cut to Winter Fuel Payment funded by a tax on wealth", stating: "The Government needs to learn that when you are in a hole, you should stop digging".
The union campaign represents mounting pressure on Reeves to abandon her current approach and implement direct wealth taxation measures to fund public services.
Labour MPs are increasingly advocating for higher direct taxation, with one stating: "I would like us to look at tax. When the public realm is in such a dire state, I am not sure having the lowest corporation tax in the G7 is the right priority."
The MP added: "I think there's an automatic assumption that you say anything about raising taxes that people run away.
LATEST DEVELOPMENTS:
- State pensioners could lose up to £70k in retirement savings due to 'frozen' triple lock policy
- State pension alert: 'Remove the triple lock' as retirees get £13k more than 'suffering' children
- New pension rules to impact anyone with pots under £1,000 - are you affected?
"I have had time and again people say to me: we are fairly happy with paying more, why don't you just ask us to pay some more income tax?' I think it really insults the electorate to think that they can't deal with that argument."
Another Labour MP expressed concerns about efficiency savings, stating: "We know that austerity doesn't work so if we are looking at more efficiency savings then I am not sure we will deliver anything better. I want to see her signal ahead of the Budget that she will be looking at things like tweaking fiscal rules and taxation."
A Treasury spokesman said: “The best way to strengthen public finances is by growing the economy. That is our focus and the key priority in our plan for change.
"Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms which are expected to grow the economy by £6.8billion and cut borrowing by £3.4billion."
