In an interview with The Sunday Telegraph,
the Chancellor has announced a new Pensions Tax Guarantee to
protect workplace pensions.
Under the new Pensions Tax Guarantee:
- The Conservatives will not
introduce any new taxes on pensions or increase existing ones for
the whole of the next Parliament.
- The 25% tax-free lump sum will be
maintained.
- Tax relief on pension contributions
will be maintained at the marginal rate.
- National Insurance will not be
extended to employer pension contributions.
The Conservatives have already pledged to protect the State
Pension from income tax with our Triple Lock Plus, meaning a tax
cut for the average pensioner of around £1,000 over the next
Parliament. They have also scrapped the lifetime allowance.
In contrast, Labour have repeatedly refused to rule out taxing
workplace pensions – one of the few major revenue raisers
left to fill their unfunded spending commitments. This is in
addition to their commitment to drag the State Pension into
income tax for the first time in history with the Retirement Tax
that will leave the average pensioner paying £1,000 more in tax.
Labour have ruled out increasing income tax, NICs and corporation
tax. Having been pressured by the Conservatives, they also ruled
out increasing VAT. But Labour still has £38.5
billion of unfunded spending commitments - which equates to tax
rises of £2,094 per working family.
It is clear they are planning to repeat history and raid pensions
to plug the gap in their spending plans, because, , the woman they want to run
the country's finances, has called for tax increases on workplace
pensions in a paper on her website. And unlike when they
were pushed into ruling out a VAT increase, they have refused to
rule out a raid on workplace pensions.
That's what Labour always do: when they cannot make the numbers
add up, they raid pensions. In 1997, – who Rachel Reeves' has
called her mentor – abolished the dividend tax credit, wiping
billions from pension pots. If that act of vandalism was not
enough, in 2000 the Labour government increased the state pension
by just 75p a week.
Commenting, , Chancellor, said:
“Conservatives have always looked after people's pensions and our
Pension's Tax Guarantee will mean there will be no tax rises or
new taxes on workplace pensions for the whole of the next
Parliament.
“Not only have Labour already said they'll introduce a Retirement
Tax on the State Pension and bring back the lifetime allowance,
but they'll do what they always do and betray pension holders to
fill their fiscal blackhole.”
ENDS
Notes to Editors
called for the restriction of
pensions tax
relief:
-
said higher-rate pension
tax relief could be restricted. ‘40 per cent of UK
wealth is held in private pension funds. To combat this
inequality, higher rate pensions contribution reliefs could
be restricted.' (Reeves, The Everyday Economy, 2018,
page 49, link).
-
Labour sources have refused to rule out that Labour
would introduce the change if elected – just saying they would
not appear in manifesto. The Daily Mail reported
Labour source insisted the ideas in the pamphlet are 'not
policy and will not feature in our manifesto' (The Daily
Mail, 31 May 2024, link).
-
This denial is conspicuously uncategorical when forced
to about turn by the Chancellor last week. In response
to significant pressure from the Chancellor on Labour's
potential raid of VAT Reeves said: ‘This is absolute nonsense.
Labour will not be
increasing income tax, National Insurance or VAT' (The
Daily Telegraph, 29 May 2024, link).
Labour are pledging to introduce the Retirement
Tax:
-
Labour have already committed to dragging the State
Pension into income tax for the first time in history with the
Retirement Tax that will leave the average pensioner paying
£1,000 more in tax. Labour attacked our plans to
introduce the Triple Lock Plus, to protect pensioners declaring
it a ‘desperate gimmick' and signalling Labour would not take
action. That means not only means higher taxes for millions of
pensioners, but also the administrative burden of going through
a tax assessment for the first time (BBC News, 28 May
2024, link; Sky News,
29 May 2024, archived).
-
On Saturday, refused to rule out a
Retirement Tax on pensioners. STUDIO: ‘Sorry,
just to reiterate that the state pension will never fall into a
tax bracket?' KENDALL: ‘We are absolutely clear. We
will never make spending commitments we can't
keep…STUDIO: ‘I'm not sure you answered my question.
Will the state pension always fall into a tax bracket in other
words will it never be taxed?' KENDALL: ‘It is, it
is... Look it is the Tories who have raised taxes on ordinary
working people and they are the people who are putting the
state pension at risk by their 46...' STUDIO: ‘But
that's not a yes or no' KENDALL: ‘We will, listen, the
Tories are the ones putting the state pension at risk because
£46 billion spending commitment...' (GB News, 1 June
2024, archived).
Labour are also committed to raiding pensions by
introducing a cap on the Life Time
Allowance:
-
said Labour would
reintroduce the Lifetime Allowance (LTA) cap on
pensions. REEVES: ‘An incoming Labour
government would look to reverse these changes [abolishing the
LTA] because I don't think it's right there's an unlimited
amount of money can be saved into pensions with a government,
with a taxpayer subsidy for it' (Sky News, 10 May
2023, archived).
Labour's unfunded spending plans would hammer working
families with £2,094 in extra taxes:
-
New analysis of official HM Treasury costing shows that
Labour have a £38.5 billion blackhole in their policies – the
equivalent of £2,094 in taxes on working
families. Labour's revenue raisers would collect
just £6.2 billion a year by 2028-29 or £20.4 billion over the
next four years. This would mean a blackhole of £10 billion in
2028-29 and £38.5 billion over the next four years (The
Conservative Party, Labour's tax rises, 17 May 2024;
HM Treasury, Opposition Costings, 17 May 2024,
link).
Labour have a disgraceful record, which would take
pensioners back to square
one:
-
Labour kept their plan to abolish tax credits for
pension funds ‘hidden' in a safe during the 1997 general
election.‘Throughout the 1990s a new-look Labour Party
had reached out to business and sought to increases its appeal
to the middle classes. Abolishing tax credits flew right in the
face of this. It is therefore scarcely surprising that Brown's
inner sanctum took the further decision to keep their plan
hidden … nobody else in the New Labour hierarchy - possibly
even including – appears to have heard' (Alex
Brummer, The Great Pension Robbery, 2010).
-
But in 1997, used his first Budget to
scrap tax relief on pension dividends. and abolished tax credits paid to
pension funds and companies when they received dividend income
net of advance corporation tax (ACT) (House of Commons Library,
Advance corporation tax (ACT) and pension funds, 9
July 2007,link).
-
It is estimated that Brown's actions could have taken
as much as £230 billion from the pensions
system.Advanced Corporation Tax (ACT) was a little
understood relief that boosted Brown's Treasury by around £5
billion a year, however compound interest and investment growth
would have swollen the pension funds over time so the true cost
of the policy has snowballed. Estimates put the value taken out
of the pensions system at over £230 billion from the pension
system (The Daily Telegraph, 18 February 2024,
link).
-
Under the last Labour government, pensions rose by just
75 pence in 2000. In 1999, announced a derisory
increase of the Basic State Pension – from £66.75 per week to
£67.50 (DWP, National Statistics, 24 January 2024,
link).
-
Under Labour, we had the fourth highest-level of
pensioner poverty among the over 65s in Europe. Nearly
a third of those over 65 were living on below average incomes -
one of the highest levels in Europe behind only Cyprus, Latvia
and Estonia (Daily Mail, 27 July 2009, link).
