The government responded to the survey and the Tax After Coronavirus report, explaining that some changes had already been made to the budget. This included freezing the threshold for inheritance tax and the lifetime allowance for pensions, announced by Chancellor of the Exchequer Rishi Sunak in March of this year.
The government also explained why other tax changes might not be a priority.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, commented on the Treasury Committee report Tax after coronavirus: the Government’s response.
She said: “The government’s response to the ‘Tax after coronavirus’ report was a’ not now! “
“Some potential tax changes have been taken off the table entirely, while others have been pushed very firmly to the other end.
“While the economy is still recovering and we still do not know if new variants will deflect the way out of the crisis, the government will not make any sudden decisions.
READ MORE: Premium Bonds: Did you win the June 2021 draw? NS&I releases details of millionaires
“No one will touch pension tax breaks, capital gains tax, inheritance tax or stamp duty until we are on a much stronger footing.”
However, when that time comes, it looks like there will be no rush to put tax changes into effect.
“Even once it is certain that the recovery is firmly established, the government has indicated that it is in no rush to make tax changes,” Coles said.
“And while budgets always have the potential to hold some nasty surprises, you have to wonder if a government would announce a slew of exciting new taxes just before going to the polls in 2023.
“When we get back on track, the government has hinted that it will address the difference in tax treatment between low-wage pensions in ‘take-home’ agreements and those included in personal group pensions.
DO NOT MISS
“He more broadly downplayed the possibility of changing pension tax breaks, pointing out that when he consulted him in 2015, there was no real consensus.
“When it comes to pensions, it’s always good news when the government chooses not to tinker with the rules.
“However, that means you can’t count on a policy change to fill the gaps in your pension savings, so it’s up to all of us to take stock of our own pension savings and make sure we are on track for the retirement we deserve.
“And while higher-rate taxpayers remain the biggest beneficiaries of the current retirement rules, some basic taxpayers may be better off redirecting additional contributions to their lifetime ISAs.”
However, there may still be changes to come when it comes to Capital Gains Tax (GCT) and Inheritance Tax (IHT).
Ms Coles explained: “This does not mean that capital gains tax or inheritance tax are completely excluded, as the government has emphasized that it is still keen to eliminate features of the tax system that distort the tax system. behaviours.
“This means that we shouldn’t expect any imminent changes, but we should take advantage of the allowances that meet our needs while we can, including the annual capital gains allowances and the grant allowances for IHT.”
Becky O’Connor, head of pensions and savings, interactive investor, also commented on the recent report, saying: “The tone of the government’s response to recommendations for major tax reform was, ‘We’re on the case. “.
“The response highlights measures the Treasury has already taken to support public finances, including freezing tax thresholds such as income tax and the lifetime pension allowance, which it has referred to as “progressive and equitable” measures.
“He also indicates that recovery rather than reform is his main priority.
“Regarding tax breaks for pensions, the response suggests that no radical change is imminent, but that the possibility of reform would be kept under review.
“The government said even small changes could have a ‘profound’ impact, so sweeping changes to pension tax relief would require ‘careful consideration’.
“For people who are considering investing for their retirement, no news is good news here – yet. Stability in pension policies has been sorely lacking in recent years, so in some ways new tinkering is the last thing one wants.
“However, reform is still on the table – and it is important for the government to consider whether the pension tax break incentivizes those who need the encouragement most.
“The response emphasized that the government should report on its consultation on tax breaks for low wages and on how to address the problem of some workers who participate in ‘take home’ programs and do not receive relief. tax because they do not pay tax.
“This sounds like the only area of pension tax relief that the government could do anything reasonably soon.”