UK Businesses Face Higher Costs as Reeves’ Tax Hike Raises £7.6bn

UK Chancellor Rachel Reeves is facing mounting pressure to address a £30 billion deficit, with pension tax relief reforms emerging as a key focus for her upcoming Autumn Budget. Analysts and insiders indicate Reeves may reduce pension tax relief from 40% to 20% for higher earners, potentially raising around £15 billion but provoking concerns about retirement savings adequacy and increased burdens on pensioners. While calls for a wealth tax on fortunes over £10 million have been dismissed as counterproductive, the government is exploring pension tax changes as a more viable revenue source amidst economic uncertainty and rising national insurance contributions. Experts warn that altering pension tax relief could discourage retirement savings, undermining long-term financial security and complicating efforts to maintain pension schemes like the Triple Lock. The Institute for Fiscal Studies and financial commentators highlight the risks of tax increases amidst a volatile global economy, with speculation about further tax hikes causing economic anxiety. Overall, pension tax relief adjustments represent a significant and contentious strategy in Reeves's broader effort to stabilize public finances without deterring essential savings behavior.