Autumn Budget 2024: How could Pensions and Taxes be affected?

With Labour leading the government, many wonder what changes will come as the Autumn Budget approaches.

Discussions around the ‘black hole’ in the country’s finances suggest budget cuts and tax adjustments could be on the agenda.

What could happen to pensions?

With 20 million people in the UK saving into pensions and a total fund of £6.5 trillion (Aviva), pensions could be a target for additional revenue for the government. One rumoured proposal is to set a flat 30% tax relief on pension contributions.

While this change could benefit basic rate taxpayers, it could hit the higher earners- especially those using salary sacrifice schemes. This change could mean losing extra tax relief and National Insurance savings.

Another rumoured change impacts the 25% tax-free cash that people aged 55+ can withdraw. Reducing or removing this option might prompt more people to withdraw funds early rather than keeping them invested for retirement.

Such a move could impact the stock market and create economic uncertainty, depending on whether people save or spend their withdrawn funds.

Inheritance Tax and other adjustments

Other rumours suggest including pensions as part of an estate for inheritance tax and taxing the survivor’s pension. This change would increase taxes for those with larger estates by adding pensions to other taxable assets.

There is also talk of adjusting Capital Gains Tax (CGT) and dividends, which could impact higher earners and business owners. Companies increasing their expenditure would be counter-productive for economic growth and productivity.

Be Prepared For Change

With potential changes on the horizon, staying informed and being prepared is more important now than ever. New policies will impact people differently, depending on their financial situation. So, it could be time to find a good adviser.