Ministers planning 'pensions raid' to pay for pandemic

Reports suggest Treasury officials are looking at three different options for pensions.

Chancellor Rishi Sunak is said to be considering a number of options on pensions.
Chancellor Rishi Sunak is said to be considering a number of options on pensions.

Treasury officials are said to be considering a pensions ‘tax raid’ in the Autumn to compensate for the costs of the pandemic, The Telegraph has reported.

According to Whitehall sources, three different plans on pension taxes are being considered, including reducing the pensions lifetime allowance.

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At a glance: 5 key points

-The plans come as Downing Street and the Treasury are debating how to pay for the spike in public spending during the pandemic.

- One of the plans being examined is reducing the pensions lifetime allowance from a little above £1 million to £800,000 or £900,000

- Another plan would see individuals contributing to pensions getting the same rate of tax relief, meaning higher-rate taxpayers would lose out,

- A third plan would see new taxation on employer contributions.

- The Telegraph reports that “well-placed” sources believe the tax reform may be included in November’s Autumn Statement, when spending levels for government departments are revealed.

What’s been said

"Our job is to keep people out of poverty, not to enrich the middle classes," a senior government source familiar with the proposals told The Telegraph.

Another played down the likelihood of an imminent overhaul, stressing that Chancellor Rishi Sunak is opposed to raising taxes on families.

Background

The Treasury and Downing Street have been locked in debate over how to pay for money spent keeping the economy afloat during coronavirus, and pensions are being looked at as a possible source of cash.

Critics say plans for a single rate of tax relief on pension contributions could mean higher earners getting more support from the Government.