The debate on the government’s budget, announced two weeks ago, continued yesterday. Stephen spoke against the Chancellor’s giveaway to the wealthiest 1% of pensioners and questioned the abolition of the Office for Tax Simplification (OTS).
Jeremy Hunt, the Chancellor, abolished the lifetime allowance on pension savings in his budget on 15 March. The lifetime allowance is the amount a person can save in their pension before it is taxed. The Resolution Foundation calculates that the 9,000 people who exceeded the lifetime allowance in 2020-21 would gain £44,000 on average from its abolition, while no households in the bottom half of the income distribution gain from its abolition.
“At a time when the tax burden on ordinary families is being raised to the highest level since the Second World War, it seems to me extraordinary that the Chancellor thinks it is right to cut the tax on the 1% of largest pension pots,” Stephen said. He added,“it’s creating a very large tax avoidance opportunity for a large number of people… [through] the unlimited amount of money that they can now put tax free into their pensions.”
Stephen further noted that the government had rejected recommendations by the Work and Pensions Select Committee, which Stephen chairs, to encourage pension saving amongst the self-employed. “£1.8 billion of tax relief could have been a very valuable incentive in making a success of an initiative along those lines,” Stephen said.