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‘This is just the start…’ Rishi Sunak may hit retirees further in next Budget

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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.

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“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.

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““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

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