Speculation is mounting ahead of Chancellor Rachel Reeves' Autumn Budget, with rumours swirling about potential tax changes affecting pensioners. The Chancellor has warned of 'no easy choices' as she seeks to address a £22bn gap in public finances, according to the Institute for Fiscal Studies.
One key measure already confirmed is the triple lock on state pensions, which will see 13 million pensioners receive an above-inflation rise next April. However, frozen income tax thresholds could mean that by April 2027, the state pension—expected to rise to at least £12,578—will exceed the tax-free personal allowance of £12,570, effectively dragging pensioners into paying tax on their state pension for the first time.
Sir Keir Starmer has refused to rule out freezing income tax thresholds, a policy that creates 'fiscal drag' as more people are pulled into higher tax brackets. The Liberal Democrats have urged the Chancellor not to use lower inflation as a justification for 'stealth tax', warning it would unfairly hit poorer pensioners and low-income workers.
Another rumoured measure is a 'mansion tax' on homes worth over £2m, which could raise up to £450m. Estate agent Knight Frank estimates over 150,000 properties in England and Wales would be affected, with an average surcharge of £4,500. Tom Bill of Knight Frank warned this could accelerate downsizing and particularly impact pensioners whose homes have appreciated in value.
