It seems everyone is talking about the Budget. Nick Reeve looks at what might change, and why the biggest rumour would probably be bad news if it turns out to be true.
Wednesday 26 November is looming large in the national diary. Chancellor Rachel Reeves will take the famous red briefcase to the despatch box to deliver her second Budget at a vital time for the UK economy.
Economic growth is weak, the cost of servicing debt is higher than it has been for some time, and business and consumer confidence are low, according to recent surveys. At the same time, the Labour Party is struggling in the opinion polls and there are rumblings of discontent from within the party.
From a pensions perspective, all the talk has been about potential tax changes – from salary sacrifice to tax-free cash, national insurance adjustments to tax relief. The most persistent rumour has been about salary sacrifice, with the chancellor expected to introduce a cap of £2,000 on contributions under salary sacrifice arrangements.
Speculation has been rife since HM Revenue & Customs published the results of a survey of employer attitudes to potential salary sacrifice changes. Since then, multiple organisations and trade bodies have rallied against the idea, arguing that it would undermine trust in pensions, reduce take-home pay for staff, and increase costs for businesses.
After more than a year of a Labour government that has been pushing hard for long-term planning in relation to pensions policy, this kind of tax change would go completely against that mindset. It also threatens to undermine the work of the Pensions Commission, as it would make it harder to persuade staff or employers to contribute more or engage more with saving for retirement if it becomes less attractive to do so.
It feels like that last push from a lobbying perspective, as we’ve seen today Pensions UK and the Federation of Small Businesses collaborate to warn against changes to pension taxation. More than 90% of Pensions UK members say they are concerned about what could happen next week.
If you haven’t had your fill of pre-Budget discussion, I talk salary sacrifice, economic growth, Budget speculation and Scotland at the World Cup with my colleague Thomas Parker from LAPF Investments on the inaugural episode of our new podcast, Always A Pensions Angle. Subscribe now to get the episode when it goes live on Monday!
For those who are joining us at the Pensions Expert Annual Conference on 26 and 27 November, I look forward to seeing you there. If you can’t make it, there will be a live blog courtesy of LAPF Investments, as well as news coverage of all the big Budget news for the pensions sector.
Nick Reeve is editor of Pensions Expert.
This editorial initially appeared in Pensions Expert’s Friday Takeaway email, summarising the biggest news of the week and the latest appointments. To sign up, please register for free.
