Rachel Reeves plots new tax raid as expert warns: She’ll attack your pension at both ends
Experts one Chancellor Rachel Reeves could attack our pensions on two fronts (Image: Getty)
On Wednesday, she said she wouldn’t hike any of the big three taxes in her autumn Budget: income tax, national insurance (NI) and VAT.
But that still leaves a lot she can do. Economists reckon she’ll must hike taxes to plug a £30billion spending gap.
She will struggle to cut spending, as Keir Starmer backtracks on the winter fuel payment raid and planned cuts to the soaring disability benefits bill.
Those relatively small measures have triggered a Labour Party civil war.
And she can’t give herself headroom by tinkering with her fiscal rules, as she continues to insist they are “iron-clad” and “non-negotiable”.
Which means she has to raise taxes. She admitted as much on Thursday.
Speaking at a Confederation of British Industry (CBI) dinner on Thursday, Reeves broached the subject of last year’s £40billion Budget tax hikes.
She insisted that she was “never going to repeat anything of that scale”. Again, she’s playing with words. Because she didn’t actually rule out further hikes.
Robert Salter, a director at tax and business advisory firm Blick Rothenberg, insists she has no choice if she’s going to balance the books. “The money has to come from somewhere, and that somewhere is taxes.”
He said billions in pensions tax relief is now “on the chopping block”.
Salter reckons Reeves will attack our pensions on two fronts. First, when people pay into a pension, and second, when they take money out.
Pensions tax breaks cost the government £48billion a year. That’s a huge sum, and a juicy target for Reeves.
Salter reckons she will raid tax relief on pension contributions, which is paid at either 20%, 40% or 45%, depending on your tax bracket.
She could even claim she’s targeting it to be fair.
Salter said she could slash higher rates of pensions tax relief to a fixed rate of 25% for all.
This could be sold as helping basic rate taxpayers build pension. It would also save the Treasury billions. But it will be a huge blow for higher earners.
The Chancellor’s second move would be to shrink the hugely popular 25% tax-free lump sum, which applies when taking money out of a pension.
Again, she could claim she’s being fair.
Today, the tax-free element is capped at £268,275. She could cut that cap to as little as £75,000, Salter said. “It would only hit those with total pension savings above £300,000, so again, Reeves could argue she’s only targeting the wealthy.”
As yet, we don’t know for sure. But Jason Hollands, managing director at wealth firm Evelyn Partners, also reckons a double pension raid is in play.
He says there are other taxes she may hike as well – I’ll be looking at those tomorrow.
Right now, one thing is certain. Reeves is coming back for more tax in the autumn. Whatever she says today.
£300 cost of living payments handed to people on four DWP benefits – see if you qualify
£300 cost of living payments handed to people on four DWP benefits – see if you qualify (Image: Getty)
Households that receive four different benefits in Doncaster can claim up to £300 from their local council to help with the cost of living. The payments form part of the Government’s Household Support Fund, which has been extended for another year to support families while costs remain high.
The Government has added a further £742million to the pot, which is allocated to local authorities across England to distribute to constituents most in need. The pot is available from April 1, 2025, to March 31, 2026. Councils in England decide how best to allocate their portion of the fund, with the amount received based on the size of the population within their catchment area and needs.
The amount of support will vary depending on the DWP benefit you receive. (Image: Getty)
The City of Doncaster Council is using its allocation to support residents by offering money towards food, household energy bills and wider essentials.
The one-off payment, worth between £100 and £300 depending on the claimant’s circumstances, will be made to those who receive any of the four Department for Work and Pensions (DWP) benefits:
- Housing Benefit,
- Local Council Tax Reduction,
- Universal Credit, which includes the housing element, or
- Means-tested free school meals.
Eligible households will receive a one-time payment to help with food costs. The amount will vary based on the number of dependent children in the household: £100 will be provided to households with one dependent child, £200 to those with two dependent children, and £300 to households with three or more dependent children. A dependent child is defined as one for whom the household receives Child Benefit.
In addition, a single payment of £100 will be made to eligible households to assist with energy bills. This payment is available to households both with and without children, provided they meet the specified eligibility criteria.
Doncaster Council has confirmed that households who received support under the previous Household Support Fund and have been verified as still meeting the eligibility criteria will receive payments automatically. These will be paid directly into the bank account previously used, with no need to reapply.
However, those who previously received support but whose eligibility could not be verified this time round will not receive an automatic payment. They will need to reapply if they believe they are still eligible.
Households that have not received a payment under the previous scheme must also submit an application if they meet the current criteria.
If you are eligible for an automatic payment, or if you apply successfully between now and July, payments will be made according to the following schedule:
- For food support, eligible households with children will receive their payment on or around July 15, 2025
- For energy support, eligible households will receive their payment on or around December 15, 2025.
Further updates regarding payments for applications submitted after July 15, 2025, will be provided on Doncaster Council’s webpage when the information becomes available.
Constituents can make a claim using the form here.
Councils across the country are offering their own varying support, making it key for Britons to check their local authority’s website or call their office to see what’s available to them.
People can use this postcode checker to find out which council they fall under.
