We Can't Have Any More Budgets Where Speculation Is Running Wild

29th October 2024

On 28th October 2024 Paul Johnson wrote an article published in The Times and on The IFS web site covering his thoughts on the speculation around coming budget.

Only a couple of days now until the most eagerly awaited budget for just about as long as I can remember. Eagerly awaited by me at least. It promises all sorts of meaty and complex changes for us fiscal nerds to get our teeth into.

If speculation is to be believed, among the changes could be one or more major reforms to the taxation of pensions. Given the scale of private pensions, and associated tax reliefs, that is not surprising. The chancellor's pre-election pledges have limited her options so much, it's pretty hard to see where else she could find serious money. At least beyond the increases in employer national insurance contributions, which look nailed on despite not being obviously consistent with those manifesto promises.

There was a time, not many weeks ago, when all the speculation was that income tax relief on pension contributions might be restricted to the basic rate. A bad idea, but one that could have netted some £15 billion a year. I actually laughed out loud when subsequent reports suggested it had been ruled out on the basis that ministers had just discovered it might hit a huge number of middle-earning public sector workers. After all, who knew that lots of teachers and nurses earn over £40,000 and have generous pensions?

Read the full article HERE