Rachel Reeves targeted pensioners in her first big move as Chancellor, by scrapping the Winter Fuel Payment. Minutes later she axed the planned £86,000 cap on social care costs, which could force tens of thousands of elderly people to sell their homes to fund nursing home fees.
Her Halloween Budget is just five weeks away, and nothing is off the table.
PM Keir Starmer has made it clear that Labour will not target working people. And since he can’t sensibly tax those who don’t work, that only leaves pensioners.
Labour seems to have a grudge against older people. Maybe its because they are more likely to vote Conservative than any other age group.
Reeves seems almost certain to hike both capital gains tax and inheritance tax, both of which are mostly paid by the older generation.
And she’ll attack our pensions in all sorts of ways.
David Brooks, head of policy at consultancy Broadstone, has given a rating for which are most likely to come into force.
I’ve written about most of them, but there’s one nobody is talking about. It’s a real shocker.
Brooks and I agree on one thing. Reeves will almost certainly slap inheritance tax on unused pension at death.
Likelihood? Brooks gives it 4/5. He reckons it’s the most likely new pensions tax of all.
Reeves is also considering cutting higher rate tax relief on pension contributions. Today, higher earners taxpayers get relief at 40% or 45%.
Reeves may cut that to 30% for all.
Likelihood? Brooks gives it 3/5. I’d agree with that rating, too. The only thing stopping Reeves is that it could be a bit complicated to do in practice. Otherwise I’d give it 4/5.
Brooks says Reeves may also slash the amount of tax-free cash people can withdraw from their pensions.
Likelihood? Brooks gives it 2/5. Personally, I’d give it 3/5, although I accept the sheer unpopularity of attacking this hugely popular benefit may deter Reeves.
So what about a wealth tax? I’ve flagged up the danger several times. Hardcore Labour activists would love Reeves to take a pop at the wealthy.
Likelihood? Brooks gives it 2/5. So would I. Working out everybody’s wealth would be insanely complicated.
The final pensioner tax is hardest to gauge. That’s because nobody is talking about it. It’s about time we did.
As I said, Starmer has ruled out hiking NI for people of working age. But he hasn’t said anything about pensioners. Brooks says “the most likely option” for changing the tax charge would see Reeves “charging NI on earned income over age 65”.
I was totally shocked when I read that.
Today, we’re all exempt from paying NI when we reach retirement age.
Yet the Treasury has pushed pensioner NI before.
Former Tory PM Boris Johnson triggered a furious backlash after he announced a 1.25% NI charge on pensioner earnings, to pay for social care.
It was axed before it came into force but Reeves could bring it back. Not at 1.25%, but the standard rate of 8%.
It would still be a massive blow. Especially with more than a million working past retirement age, often in a desperate bid to make ends meet.
My likelihood rating? Probably just 2/5, but who knows. I never dreamed Reeves would axe the Winter Fuel Payment, so everything is up for grabs, including NI for retirees. Who’d be a pensioner today?
