“On the basis of George Osborne’s recent track record on pension and tax reform we can probably look forward to an Autumn Statement more akin to a mini-Budget with at least a few further surprises in store in those respects
“Predicting the unpredictable is, of course, fraught with difficulty but here are some areas the Chancellor might choose to concentrate his attention on.”
The level of the new state pension
“The Government is committed to setting the level of the new state pension above that of the Pension Credit Guarantee (Minimum Income) figure. By law, that should rise at the same rate as the basic state pension which from next April is expected to go up by 2.9% in line with earnings from £115.95 to £119.30 a week – an increase of £3.35.
“So a 2.9% rise in the Pension Credit figure should see it increase from the current £151.20 a week to £155.60 producing a new starting figure for the new state pension of at least £155.65 a week.”
Prediction: The Government will announce these state pension increases as part of or shortly after the Autumn Statement
Women’s state pension ages
“Given the widespread support for the campaign in opposition to the accelerated increase in women’s state pension ages to 66 the Chancellor may decide to modify the programme somewhat.”
Prediction: The age increase from 65 to 66 will be extended by 6 months from November 2020 to April 2021
Tax-relief
“In view of the growing belief that radical changes to the existing arrangements for pension tax relief will come into force from next April, the Government may deem it necessary to bring in measures to stem the inflow of extra contributions by higher rate taxpayers into their pension funds before the year end.”
Prediction: The Chancellor will announce “anti-forestalling” measures to take immediate effect whilst still holding back on his full intentions on the exact nature of his proposed changes to tax-relief until Budget 2016
Tax Allowances
“The Chancellor may yet be persuaded that the Lifetime Allowance serves no useful purpose and is largely redundant in the face of the largescale reductions that have occurred in the level of the Annual Allowance since 2011.”
Prediction: The Chancellor will announce the abolition of the Lifetime Allowance or alternatively leave it in place to cap the level at which tax relief ends but without the current consequential fines and penalties for doing so.
National Insurance for pensioners
“It is frequently said that there is no equitable reason why national insurance contributions on earned income should cease at the point where an individual earner reaches state pension age and chooses to stay on or resume work.”
Prediction: The Chancellor will announce that with effect from 2017 all workers up to age 70 will be required to pay national insurance contributions in the same way as others currently deemed to be of working age.
Merger of tax and NI
“On two previous occasions the Chancellor has indicated a desire to bring about a merger of tax and NI without being specific about how and when this could be achieved. There seems little doubt that large scale operational savings (in both IT and manpower) could result from such a merger and could be a tempting target for cash- strapped Treasury in the current financial climate.”
Prediction: The Chancellor may be able to update us on his plans and timetable for any such merger.
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