Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Labour urged to consider £9bn tax on staff pensions to curb government spending

by September 10, 2024
September 10, 2024
Labour urged to consider £9bn tax on staff pensions to curb government spending

Rachel Reeves is being urged by the Resolution Foundation to implement a £9bn tax on pension contributions in the upcoming Budget to address rising government spending.

The left-leaning think tank recommends that companies should be required to pay National Insurance on contributions made to staff pension schemes, arguing that the current tax relief is “unnecessary” and “arbitrary.”

This proposal, however, has raised concerns among experts who warn it could disincentivise employers from contributing to staff pensions. Steve Webb, former pensions minister and current partner at consultancy LCP, cautioned: “We want employers to be generous and pay generously into people’s pensions. The more we tax them for doing that, the less they will do.”

Under current rules, employees must contribute a minimum of 5% of their salary to a workplace pension, while employers pay at least 3%. Although employees pay National Insurance on their contributions, companies are exempt. The Resolution Foundation suggests aligning the tax treatment of company contributions with the 13.8% rate applied to other employer National Insurance contributions.

The proposed changes would affect millions of workers, particularly those receiving contributions above the minimum rate. Many companies currently offer matching schemes, with around 13.9 million employees benefiting from contributions exceeding 4% of their pay—a significant tax-free benefit. Critics argue that implementing this tax could lead employers to reduce their pension offerings or adjust compensation to offset the increased tax burden.

The think tank estimates that these changes could generate £9bn for the Treasury, and also recommends raising inheritance tax and capital gains tax to secure an additional £20bn, helping avoid severe public service cuts. However, adopting such measures could expose Labour to accusations of breaking its election pledge not to raise taxes on working people.

The Resolution Foundation’s suggestion comes amidst broader discussions within Labour about pension tax reform. Baroness Drake, a prominent figure in Labour’s past pension reforms, has advocated for a “flat rate” tax relief approach, which could affect up to six million higher and additional rate taxpayers. This policy shift would see high earners paying more tax on their pension contributions, potentially reducing the tax advantages enjoyed by wealthier savers.

Read more:
Labour urged to consider £9bn tax on staff pensions to curb government spending

0
FacebookTwitterGoogle +Pinterest
previous post
US indictments reveal AI use in Russia disinformation campaign targeting 2024 election
next post
Think tank urges Labour to consider inheritance and road pricing in budget proposals

You may also like

What SMEs need from the Government in the...

March 27, 2024

Gambling giant Entain could lose UK licence amid...

August 17, 2022

Getting To Know You: Jordan Fantaay, Founder, Pumpt

August 22, 2023

Ocean Harvesting to raise €500,000 for InfinityWEC Design...

March 20, 2024

Government ‘removes state guarantees from almost £1bn in...

November 1, 2023

UAE buys Mclaren’s automotive business following record losses

December 12, 2024

Why Choosing the Right Hosting Service is Crucial...

August 12, 2024

Retailers warn of inevitable job losses amid £7bn...

November 19, 2024

Church of England divests of fossil fuels as...

June 23, 2023

Last orders called on takeaway pints as Home...

August 7, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • ‘Gone too far’: GOP lawmakers rally around Trump after Musk raises Epstein allegations

      June 6, 2025
    • Democrats begin to embrace Musk amid Trump spat after party railed against him as a ‘dictator’

      June 6, 2025
    • Trump administration defends US and Israeli sovereignty with new sanctions against four ICC judges

      June 5, 2025
    • Musk unleashes wild Epstein claim against Trump after being booted from DOGE

      June 5, 2025
    • Three Charts Showing Proper Moving Average Alignment

      June 5, 2025
    • Biden only hand-signed one pardon during final spree, and it was his most controversial one

      June 5, 2025

    Categories

    • Business (8,149)
    • Investing (2,011)
    • Politics (15,542)
    • Stocks (3,129)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved