Rachel Reeves is reportedly planning a fresh tax raid. (Image: Getty )
Millions of pension savings could be at risk under a new stealth tax raid under Rachel Reeves after HMRC officials launched an investigation into workplace pension schemes. The tax office is understood to be probing reforming the salary sacrifice system in a bid to plug a black hole in public finances in the wake of the Chancellor’s October Budget and President Donald Trump’s tariffs.
Salary sacrifice involves an employee forgoing or ‘sacrificing’ part of their wage to enable their employer to make extra contributions to their pension pot. This method of saving also effectively lowers the employee’s annual taxable salary, so they pay less income tax and National Insurance.
But The Telegraph reports that potential changes to the system being considered could cost the average earner more than £500 a year. Sir Steve Webb, the former pensions minister, told the publication HMRC’s consultation on the salary saving scheme put a potential tax raid “firmly on the agenda”.
Millions of pensioners are at risk of a stealth tax, according to reports (Image: Getty )
In the report published by HMRC, the tax office states it is looking at three different ways in which the benefit could be “hypothetically” cut back. According to Money Week, potential cutting routes could be: removing the National Insurance exemption for employers and employees, removing the income tax exemption for employees on their sacrificed salary, or removing the National Insurance exemption but only on salary sacrificed above a £2,000 per year threshold.
Sir Steve, from consultants LCP, said: “With a Chancellor reportedly looking to make up a multibillion-pound hole in the public finances in her autumn Budget, this research suggests that changes to salary sacrifice are firmly on the agenda, and likely to be considered as a potential revenue-raising measure.”
HMRC could be hammering pensioners with more taxes (Image: Getty)
He told the Telegraph: “You’re basically saying to someone you either need to pay more money, or you carry on and your pot will be smaller when you get to retirement.
“There’s no positive impact of it. They either take the pain, or they take the pain when they get to retirement.”
A Treasury spokesman told the Telegraph: “These claims are totally speculative. HMRC regularly commissions independent research on all aspects of the tax system.
”We are committed to keeping taxes for working people as low as possible.”
Express.co.uk has contacted the Treasury for comment.
Deluded Nicola Sturgeon takes aim at Nigel Farage and Reform UK with bombshell claim
The former SNP leader believes that Reform pose a threat to Scottish devolution (Image: Getty)
Nicola Sturgeon has been slammed after insisting that Nigel Farage would look to abolish both the Welsh and Scottish Parliaments if he had his way. Reform UK have hit back at the claims, saying that they oppose “nasty nationalism” and not devolution.
First Minister of Scotland John Swinney and his predecessor Ms Sturgeon have both claimed that success for Reform in Scotland or Wales could see both countries’ parliaments abolished.
Mr Swinney told the Daily Record: “What it would do is that it would bring right into the heart of the parliament opponents of devolution. We would have active opponents of devolution who want to dismantle it. It’s crystal clear from the Farage rhetoric that they despise devolution.”
The Scotland Act 1998 established defined powers for the Scottish parliament (Image: Getty)
When asked specifically if he thought that Reform MSPs would seek to abolish Holyrood, he added: “I think that’s exactly what would happen and I think they would use it to undermine the credibility of the Scottish Parliament.”
His comments echo those of former leader Ms Sturgeon who believes that the party poses a risk to the future of Scottish devolution.
Speaking at an event in Wales for Yes Cymru last week, she said: “Do you know what – now, would I sit here and say 100% that the existence of the Scottish Parliament will not come under threat?
“The Tories, I think, are very hostile now to devolution. And that’s before you factor in the possibility – and I’m not going to put it any stronger than that, although I think it potentially is stronger than that – that Nigel Farage will be in Number 10 after the next general election.
“Does anybody really believe that Farage wouldn’t come after the Scottish Parliament or the Senedd here? Because these are creatures of Westminster statutes: they can be abolished.”
First Minister John Swinney has also sounded the alarm (Image: Getty)
Reform UK have not publicly indicated opposition to devolution, but former MP Rupert Lowe has said on record that he believes that the United Kingdom should be ruled as one, with less power given to regional assemblies.
Reform councillor Thomas Kerr said: “John Swinney’s getting more and more unhinged as each day goes on – but given our canvass data, we aren’t surprised.
“He and SNP MSPs have broken Scotland after 18 years of abject failure.
“It’s not devolution that Reform opposes, it’s nasty nationalism and incompetent politicians – that’s what Reform MSPs will bring to Holyrood, a real dose of straight-talking common sense.”
