On the go: The government has confirmed that Chancellor of the Exchequer Sajid Javid will deliver his first Budget on March 11, with the announcement expected to bring some changes for the pensions industry.
The government is expected to look at pension tax, particularly the tapered annual allowance, which has dominated headlines in relation to senior National Health Service clinicians. The Conservative manifesto promised to put an end to the problems faced by doctors, while the Treasury pledged in August to review the impact of the taper.
A statement released by the Treasury on Tuesday said the Budget would prioritise the environment, and boost spending on public services and tackle the cost of living.
Tom McPhail, head of policy at Hargreaves Lansdown, said addressing the annual allowance taper was likely to be one of the biggest challenges the chancellor will face.
Introduced in 2016, the tapered annual allowance gradually reduces the allowance for those on high incomes – £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost. For those in frontline public sector jobs, working crucial extra shifts can trigger tax charges in excess of the extra income they earn.
Mr McPhail said: “This is not an easy one to fix without making the pension system even more complicated than it already is. The Treasury could simply scrap the taper, but that would then increase the already substantial amount of tax relief enjoyed by higher earners.”
Former pensions minister Sir Steve Webb, who is now head of policy at Royal London, said in a tweet: “If the Budget is on March 11, that leaves very little time to implement major structural reform on pension tax relief – such as scrapping the taper – by April 6. [This] makes a Treasury tweak (for example, raising the £150,000/£110,000 thresholds) more likely.”
