DISCOVER WHAT THE AUTUMN BUDGET COULD MEAN FOR WORKERS AND PENSIONERS

The National Institute of Economic and Social Research (NIESR) has issued a stark warning. If no action is taken, the government is likely to miss its fiscal rule, which requires that day-to-day spending is covered by tax receipts of a significant £41.2 billion by 2029/30. To stay on track, Chancellor Rachel Reeves will need to implement further tax increases.

This raises important questions about the policies being considered and who might face the greatest financial impact.

COULD FREEZING TAX THRESHOLDS TIGHTEN YOUR FINANCES?

Freezing Income Tax thresholds has become one of the most effective, yet hidden, methods of collecting taxes. While Reeves previously stated in the Spring Budget that this freeze would end in 2028, she has since avoided reaffirming that promise.

Extending the freeze until 2030 would exacerbate fiscal drag, a process in which wage increases push taxpayers into higher tax brackets without providing a meaningful boost to their purchasing power.

WILL PENSION TAX PERKS COME UNDER SCRUTINY?

For decades, pensions have benefited from generous tax incentives, including relief from Income Tax and National Insurance to promote saving for retirement. However, these benefits may soon be subject to review.

Reeves could consider limiting the 25% tax-free lump sum that retirees can withdraw or replacing the current system with a flat rate of tax relief regardless of an individual’s earnings. Such changes would have a significant impact on pensioners, particularly those who rely on lump sums for secure retirements, as well as workers using salary sacrifice schemes for long-term savings.

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This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available The Financial Conduct Authority does not regulate estate planning, tax advice or trusts.