New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Chancellor risks Budget rebellion over squeeze on older workers

Chancellor risks Budget rebellion over squeeze on older workers

Chancellor Philip Hammond’s November Budget could be derailed by Conservative Party rebel MPs angry at his polices and eager to get him sacked, according to The Times.

Earlier this month Hammond suggested a tax squeeze on older people and pensioners, potentially involving changes to pension tax relief, to fund spending on the young.

According to the paper this has angered Conservative MPs and now the chancellor has been warned by his colleagues in the cabinet that he faces a rebellion on the Budget.

While the Conservatives have a deal with the DUP to help it pass votes in the Commons, it would only take a relatively small rebellion of Tory MPs to derail legislation. Failure to pass his Budget plans would spell the end of Hammond’s time as chancellor.

However, cuts to pensions tax relief have been tipped as likely, given that Hammond needs to raise revenues and cutting tax relief for the well-off would be the least unpopular way to do that.

Last month Royal London policy director Steve Webb said: ‘He’s a few months after a disastrous election, so he’s unlikely to raise the headline rates of income tax, national insurance or VAT, so where’s he going to look for money? Tax relief on pensions.'

He said cutting the lifetime allowance from its current £1 million level was an option because ‘passes the Daily Mail test’, in that most of the public thinks a million pounds is ‘a lot of money’.

Webb added that changes to the annual allowance could also be on the cards as a chancellor can ‘always find half a billion in pensions tax relief’, where the impact is not felt as heavily as if the cuts came to schools, or the NHS.  

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis