It is widely expected that the October 2024 Budget will include a mix of spending cuts and tax rises to improve the overall state of the public finances.
On the revenue raising side, the Labour manifesto of 2024 ruled out a number of options as follows:
“Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT”.
It also said:
“Labour will cap corporation tax at the current level of 25 per cent”.
Given that income tax, VAT, National Insurance and corporation tax account for nearly two thirds of all tax revenues, this suggests that the Government will be looking hard for other potential sources of revenue.
One frequently discussed way in which the Government could raise extra revenue would be through changes to tax relief (and related reliefs) on pension contributions, given that the Government estimates that this system cost around £48.7bn in 2022/23.
The purpose of this paper is to examine what changes might be made.
