Rachel Reeves’ next tax blow has been tipped to include stripping pensioners of a valuable perk.
Chancellor Rachel Reeves may target pension tax reliefs in the Budget (Image: PA Images)
The Chancellor is believed to be mulling a shake-up of pension tax reliefs in the Budget to help the Government plug a disputed £22billion black hole in the country’s finances this year.
When someone turns 55, they can normally take 25 percent of their pension without having to pay tax up to a £268,275 limit, with the remainder usually liable to be taxed in the same way as other income.
But the Labour Government is being urged to cut the cap on tax-free cash for those with the largest pension pots.
Steven Cameron, Public Affairs Director at wealth manager Aegon, said there is a possibility the Budget could either cap the tax-free lump sum at a much lower amount or reduce the proportion available to 20 percent or so. He explained both moves would increase the tax take.
Rachel Reeves says there’s a £22bn black hole in this year’s public finances she needs to plug (Image: Getty)
Mr Cameron told The Times that to generate extra income tax, those changes would have to apply to pension pots already built up over years or decades.
He continued: “This would be highly controversial, reducing one of the most valued tax incentives that pension savers look forward to.”
The pensions expert said for anyone planning to take their tax-free lump sum soon, it may be worth thinking about taking it before the Budget, which Ms Reeves will deliver on October 30.
However, Mr Cameron cautioned not to take money out of your pension before you need to as other tax benefits would be lost.
The Institute for Fiscal Studies (IFS) think tank has recommended the Chancellor should reduce the lump sum to £100,000, arguing it was hard to justify subsidies for wealthier savers.
Rachel Reeves has already stripped millions of pensioners of winter fuel support (Image: Getty)
By doing so, Ms Reeves could raise some £2billion per year, according to the IFS, which said such a move would impact about one in five retirees.
The think tank cautioned against setting a flat rate of tax relief for pension contributions, City AM reports.
Such a move would be “damaging, complex and inequitable”, according to remarks attributed to the IFS by the same publication.
Ms Reeves has repeatedly warned that there are “more difficult decisions to come” as the government looks to make savings. Millions of pensioners will already suffer from the Government’s decision to means test the winter fuel allowance.
The Treasury has warned more decisions on taxing and spending will be taken “in the round” at the Budget.
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The new face quietly becoming a key figure behind the scenes for Labour
Dan Hughes with Deputy PM Angela Rayner and Dame Angela Eagle. (Image: )
A former Labour adviser turned public relations executive has quietly become a key force in the party’s fundraising machine.
Dan Hughes, whose clients range from corporations to high-profile public figures, has been harnessing his impressive network to galvanise support for key events.
He has been working behind the scenes with Labour bigwigs to persuade many corporate clients to attend and sponsor events and fringe meetings at the Labour conference in Liverpool this week.
A Labour source said: “Dan has brought in major sponsors for various receptions, some of which will be attended by members of the cabinet and the Prime Minister.”
In recent years, he has drummed up support and funding for Health Secretary Wes Stressing, Home Office minister Dame Angela Eagle and Seen Valley MP Kim Leadbetter in the run up to the general election.
Dan Hughes has been harnessing his impressive network to galvanise support for key events. (Image: )
Mr Hughes organised two major events for Health Secretary Wes Streeting, one at Lord Waheed Alli’s plush London home with actor Sir Ian McKellen and other prominent gay celebrities and entrepreneurs.
He also arranged another in Liverpool with football icons Jamie Carragher and Gary Neville, which raised significant sums for the party.
The insider explained: “Dan’s a well-connected figure with friendships spanning the business, celebrity and political world and was involved in Labour’s fundraising efforts – particularly for LGBT MPs in the run up to the general election.
“He’s done well in his PR career and is actively helping Labour attract donors and celebrity support. He’s enlisting his client base to back the party and it is working.
“He has organised two major events for Wes Streeting alone —one at Lord Waheed Ali’s plush London home with Sir Ian McKellen and other prominent gay celebrities and entrepreneurs. He arranged another in Liverpool with football icons Jamie Carrager and Gary Neville involved. Both raised significant sums for the party.
“He also had the Deputy Prime Minister in Liverpool fundraising for Angela Eagle at a luxury fundraising luncheon back in April. He is well networked and using that to Labour’s advantage.”
As the 2024 Labour Party Conference kicks off in Liverpool this weekend, his influence looms large once again. Many of his clients are sponsoring key events at the conference, ensuring that Labour’s fundraising efforts remain well-fuelled.
The PR executive has also secured invites for his clients to attend some of the most exclusive events during the Liverpool conference, including dinners and lunches with some of Labour’s most prominent politicians. A clutch of donors attending will also have front row seats for Keir Starmer’s first Labour conference speech as Prime Minister.
Meanwhile, records show that he has personally donated thousands to Wes Streeting and other Labour figures in recent years including the Brent MP, Dawn Butler.
A Labour insider, who knows the PR man well, added: “He’s got a reputation as an operator and Labour MP’s like him, especially Angela Eagle, who he worked with for years and Streeting who he’s led significant fundraising for.
“Dan has donated thousands to Labour figures in recent years, including the Brent MP, Dawn Butler and also the North West Labour Party.”
