The new government’s first Budget seeks to raise £40bn, with an increase in employers’ National Insurance Contributions doing most of the heavy lifting. Arguments will rumble on as to whether the government has kept its manifesto’s promises on taxation, but few would take issue with the Prime Minister’s previous assessment of the Budget, when he warned that “it’s going to be painful”.
Rumours of significant changes around pensions did not come to pass, with one exception – death benefits payable from pension schemes are to be brought within the Inheritance Tax net. This has the potential to get very complex and very messy. HMRC has published a technical consultation and the pensions industry will be grateful that the change is not being introduced until April 2027. All of that interim period will be needed to develop and put in place procedures that avoid delays and errors at a time when utmost sensitivity and efficiency is needed.
Our Pensions Briefing article provides further commentary and analysis.
Wider economic impact:
- The “bigger picture”
- Rising spending and taxes
- Changing debt rules, higher debt, and higher investment
- UK ISA not proceeding
- State pension levels from April 2025
- Minimum wage rise
Tax measures:
- Inheritance tax on pensions
- Employer National Insurance rises
- Lifetime and annual allowances
- Tax-free lump sums escape unscathed
- Marginal rate tax relief maintained on pension contributions
- Regulating tax advice
- EEA (and Gibraltar) transfers, schemes and administrators
- Freeze on personal allowance and income tax higher-rate tax thresholds NOT extended
