Rachel Reeves to 'scrap' pension tax raid after warnings it will hit teachers, nurses and public sector workers

7 October 2024, 12:31 | Updated: 14 October 2024, 07:57

Labour is set to ditch it's controversial pension tax raid after warnings it would hammer up to a million teachers, nurses, and public sector workers.

Chancellor Rachel Reeves had planned to raise funds by reducing tax relief on those earning £50,000 or more per year.

Senior Treasury officials have warned that the measure would disproportionately affect those on modest incomes employed by the state.

For instance, a nurse earning £50,000 could face an additional annual tax bill of up to £1,000.

One Government insider reportedly blasted the idea as “madness,” especially after public sector workers just received a pay rise.

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Former Pensions Minister Steve Webb told The Times: "I don't think this is something that Reeves will want to do, not least because it will infuriate public sector unions just weeks after the government agreed pay settlements with them."

Chairman of the British Medical Association pensions committee Vishal Sharma said: "Attacking our pensions in this way would completely reverse this progress by once again taking money away from doctors in a different way.

"Not only would this negate the recent hard-won pay rises but it would likely reignite the recent pay disputes that have been seen across the NHS."

With Labour still desperate to plug a £22 billion hole in the public finances, Treasury officials are now hunting for other ways to rake in cash.

The Government has repeatedly cautioned the Budget on October 30 will involve "difficult decisions" on tax and spending.

A range of options for generating tax revenue have been touted, including increasing capital gains tax.

CGT is a tax on the profit made when you sell or dispose of an asset, like property or shares, for more than you paid for it.

You only pay tax on the gain, not the total amount received from the sale.