'This is just the start...' Rishi Sunak may hit retirees further in next Budget

Boris Johnson launched major tax reform in early September, as taxpayers were forced to pay more towards a Health and Social Care Levy. This levy is designed to cover rising NHS and social care costs and while the Government assured it was spreading “the pain” evenly, some Britons may end up paying more than others. Despite the broad range of changes introduced, many fear the amounts raised will not come close to covering the costs of coronavirus and as such, Rishi Sunak will be forced to take more from taxpayers.

Maike Currie, an investment director at Fidelity International, examined the changes when they were announced and warned more may be on the horizon.

“The one-off suspension to the triple lock for the state pension has been offered as a way to reset the balance between generations while addressing the data anomaly of an 8.8 percent increase in average earnings,” she said.

“By only suspending the triple lock for one year, the Government has avoided scrapping the manifesto promise completely, instead relying on a double lock of inflation or 2.5 percent – whichever is higher. The breaking of the triple lock was almost inevitable, once it was made clear that National Insurance contributions are to increase by 1.25 percent for both employees and employers. By also applying the levy to working adults above state pension age, the Government argues it is spreading the pain of paying for the pandemic between individuals and businesses, as well as across generations.

“The announcement of a 1.25 percent increase in taxation of dividends is clearly aimed at allaying criticism that the new policy unfairly puts pressure on the working population to provide support for those already in retirement, with no impact on the very wealthy.

“The Government also stated that most everyday investors will be unaffected. Shares held in ISAs are not subject to dividend tax and, due to the £2,000 tax-free dividend allowance and the personal allowance, around 60 percent of individuals with dividend income outside of ISAs are not expected to pay any dividend tax or be affected by this change in 2022-23.

“”This is just the start of the UK Government tightening its belt as it gears up to pay for the cost of the COVID-19 pandemic, and nothing – not even manifesto promises – are off limits.”

READ MORE: Rishi Sunak’s tax changes to force ‘shorter timeframes’ for taxpayers


Fidelity International also surveyed a nationally representative sample of 2,000 UK adults, with the results showing 57 percent of people do not support the state removing the triple lock, rising to 76 percent for those aged 55 or over.

Unfortunately, taxpayers may need to get ready for further costly changes in the weeks ahead as Rishi Sunak evaluates his options.

Ms Currie continued: “The breadth of the announcement made by the Government this week shows that nothing is off the table when it comes to paying for the pandemic. We now know that the Treasury has also launched a spending review which will conclude alongside the Budget announcement in just over a month’s time.

“Levelling Up, Global Britain, climate change, domestic infrastructure, and innovation are spending priorities according to the Government, and we can expect to hear more about them in October. However, there are also rumours other forms of taxation could also be reviewed, such as capital gains tax, inheritance tax or the pensions lifetime allowance.

“It is difficult to predict what will happen when it comes to politics, but given the response to changes made to national insurance contributions, dividends tax and the triple lock this week, further tax reforms on wealth could still be announced to appease critics.”


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Caroline Walker, a Tax partner at North East accountants/business advisers, noted pension rules and certain reliefs specifically could be targeted.

“You can never say never but the view is that there are unlikely to be headline tax rises as whilst CGT and pensions tax reliefs are under scrutiny, they’ve just introduced a new ‘tax’ from April 2022 – whilst this supposedly pays for social care etc it still leaves the funding of the black hole to be resolved,” she said.

“However, introducing further tax rate changes could really annoy the voter. Perhaps they may introduce other tax rises indirectly/stealthily by tweaking certain rules.”

Specifically, Ms Walker detailed this could include:

  • Abolishing indexation allowance claimed by companies on the sale of assets.
  • Increasing the qualifying period of ownership for BAD relief (ex entrepreneurs relief).
  • Reducing the threshold for the reduction of the personal allowance from £100,000 to say £80,000.
  • Reducing the maximum pensions savings allowance from £40,000.

© EXPRESS Social care

While the Chancellor has not confirmed what the Autumn Budget will be included ahead of time, HM Treasury detailed the Government’s broad goals. The upcoming three-year review will set UK government departments’ resource and capital budgetsfor 2022-23 to 2024-25 and the devolved administrations’ block grants for the same period.

HM Treasury explained that when everything is added to what it’s already provided to “invest in our future”, core departmental spending will grow in real terms at nearly four percent and by 2025, spending will be £140billion more per year in cash terms than at the start of the Parliament. This will likely place pressures on the Government’s coffers.

At the Spending review, the Government will “set out how we will Build Back Better, deliver the priorities of the British people and continue to support businesses and jobs” and they said this will be done through:

  • Ensuring strong and innovative public services – making people’s lives better across the country by investing in the NHS, education, the criminal justice system and housing;
  • Levelling up across the UK to increase and spread opportunity; unleash the potential of places by improving outcomes UK-wide where they lag and working closely with local leaders; and strengthen the private sector where it is weak;
  • Leading the transition to Net Zero across the country and more globally;
  • Advancing Global Britain and seizing the opportunities of EU exit;
  • Delivering our Plan for Growth – delivering on our ambitious plans for an infrastructure and innovation revolution and cementing the UK as a scientific superpower, working in close partnership with the private sector.

As HM Treasury confirmed these plans, Mr Sunak commented: “Since the start of the pandemic, we’ve delivered on an unprecedented scale to protect people’s jobs and livelihoods.

“Despite the worst economic recession in 300 years, we have not only got people back into work through the Plan for Jobs but continued to deliver on the priorities of the British people.

“At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.”

Full details on HM Treasury’s Autumn Budget plans can be found on the Government’s website. Additionally, impartial guidance on the state’s current coronavirus support measures, such as the furlough and SEISS scheme, can be sought from the likes of Citizens Advice and Money Helper.

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