I am sure during the French Revolution the aristocracy must have wished they could have avoided Madame Guillotine as many times as pensions tax relief has dodged the chancellor’s axe.
In the most recent Budget, pensions tax relief once again managed to avoid any cuts and, frankly, I think it is a disgrace such largesse continues to be lavished on such a smallgroup of beneficiaries. It really is a case of those who do not need it continually being given more of it.
The chancellor’s actions – or, to be precise, lack of actions – are even more puzzling, given that in October he announced at the International Monetary Fund’s annual meeting there were set to be cuts to “eye-wateringly expensive” pension tax breaks as he sought to balance the books.
However, a report into household finances including pension taxation, released in October by the Treasury Committee, stated there was “no consensus” for either incremental or radical reform to pension tax relief.
An increase to the personal allowance, moving the current £11,850 threshold upwards to £12,500, should put an average £130 back into the wage packet of those in the middle income bracket from April 2019.
However, those earning the most receive yet another bonus as the higher rate threshold also moves at the same time from £46,351 to £50,000.
Meanwhile, recent research undertaken by the BBC reveals those at the bottom of the earnings pile who are receiving the problem-ridden Universal Credit payments are two-and-a-half times more likely to slide into rent arrears than those who are receiving the old style benefits.
We do not need to look too far into the past to know this set of circumstances leaves those already in debt – with little ability or opportunity to increase their earning potential – with little option other than to desperately accrue more debt.
Across history, the rich getting richer unchecked while the poor get poorer has not been a successful formula, either for individuals or the economy as a whole.
If the chancellor truly wants to deliver a Budget that is good ‘for all’ and allows everyone to eat at least a bit of cake, he is going to need to start taking at least a slice or two from those who can afford it most.
Ken Davy is chairman of SimplyBiz Group