Rachel Reeves may have to slap Brits with more tax rises if she wants to avoid breaking her own fiscal rules, experts have warned.
The Chancellor promised only “one major fiscal event a year”, however the Office for Budget Responsibility is soon expected to slash its growth prediction in its forecast on March 26.
If this happens, Ms Reeves may be “forced” to announce even more tax rises, according to Neil Insull, partner at business advisory firm Blick Rothenber.
“Lower growth projections in the OBR report will cause further jitters in the already nervous bond market and it will be no surprise if the Chancellor looks to raise tax revenues to meet her fiscal rules”, he said.
One of the likely moves Ms Reeves could make is reducing the tax-free pension allowance people can claim.
As it stands, anyone over 55 can claim 25% of their pension tax free, up to a maximum of £268,275.
However, the Government has reportedly discussed with the UK’s leading pension providers the effect of reducing that figure to £100,000.
Reeves decided against taking this step in her maiden budget in October 2024, but faced with breaking her fiscal rules, she may do soon.
Director at Blick Rothenberg Robert Salter said: “This would be quite controversial, as it is probably the most well-known bit about pensions for the average taxpayer.
“Plus, as a country, we clearly need to be saving more from a private pension perspective than we are presently doing, and changing the rules about pensions could easily be said to undermine the faith that people have in the pension system.”
