There is growing speculation that the way pensions are taxed could be changed in the Budget.
Chancellor Rachel Reeves says she needs to find £22bn and some experts say she could change the system on workplace or private pensions to find some of this money. This is separate from another debate about the state pension.
There are a number of options which could affect workers getting their first job, those already working, all the way up to those in retirement. This is what could happen and why you should care even if you’re only in your 20s.
Make employers pay more national insurance
When you get paid, national insurance (NI) is deducted and the government spends it on things like benefits and public services. Your employer has to pay a NI contribution too.
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However, money that goes into a pension is free from income tax and NI.
One option for the chancellor is to make employers pay at least some NI on the money they put into workers’ pensions.
Doing so could immediately raise billions of pounds for the government.
However, this extra cost to business owners could leave them with less money to spend on hiring and investing. It could therefore become harder to get a job.
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Businesses could also limit pay rises, hitting all their workers, or reduce the pension contributions they make for new staff.
Alternatively, employers who currently make the most of the NI break by encouraging workers to take less in pay and more in pension – known as salary sacrifice – could be stopped from doing so.
The attraction of this option for Ms Reeves is that she can raise money without a visible difference to people’s take-home pay.
The downside is it creates less of an incentive for employers to put money into their staff’s pensions. That would mean when current workers retire they wouldn’t have as much income.
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Change the rules on inheriting pension savings
Various rules exist when inheriting money from partners or parents when they die.
Inheritance tax is paid if an estate is valued at more than £325,000 but any money saved in a pension does not count towards this.
Separately, anyone who dies before the age of 75 can usually pass on what is left of their pension savings tax-free as a lump sum, or an income.
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If they are 75 or older when they die, their pension money can still be passed on, but it is treated as income and the person they leave it to may have to pay income tax. There is more on these rules here.
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Removing these tax breaks would give the government more money, but exactly how much is unclear. The vast majority of people don’t pay inheritance tax anyway because they are not left estates worth more than £325,000.
There could also be anger from people who have organised their finances under the current rules, only to find their loved ones would get a lot less if those rules changed. That anger would be even greater among those who have already retired, as they have less time to do much about it.
Tax-free lump sum could be capped
From the age of 55 (or 57 from 2028), anyone with pension savings can take a quarter of their money as a tax-free lump sum up to a maximum of £268,275.
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Some use that money to pay off their own mortgage, if they have one. Others use it to help children and grandchildren buy a first home.
The chancellor is said to be considering lowering the cap.
By limiting the tax-free limit, people will eventually pay more in income tax when they take their pension. However, there are questions over how much extra money that would raise for the government and when.
Making arrangements for those who have already exceeded the limit, or were planning to, could also be complex, and reduce how much extra tax the Treasury gets.
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Introducing a single rate of pension tax relief
The build-up to every Budget usually sees speculation about changing pension tax relief.
When you pay into a pension, some of the money that would have gone to the government in tax goes into your retirement savings instead, known as pension tax relief.
You don’t pay tax when putting money into a pension but you do when you come to take that money as income.
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Under the current system, you receive pension tax relief at the same rate as your income tax bracket – meaning basic rate taxpayers receive relief at 20%.
Some economists say it would be fairer to give the same level of relief for everyone.
Setting a flat-rate of relief at, say 25%, could benefit lower-earning employees who currently get 20% relief, by further reducing their tax bill.
However, higher rate taxpayers with an annual income of about £50,000 or more would lose out, because tax relief would be lower than now.
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An added, but important, complication is that a huge group of public sector workers, and some in the private sector too, have so-called defined benefit (DB) pensions.
Ensuring the correct level of tax relief is applied to higher-rate taxpayers with these pensions would be highly complex.
It may mean they are automatically given 40% or 45% tax relief, then later handed a tax bill – possibly for thousands of pounds – to pay some of that back.
Tom Selby, from investment platform AJ Bell, says this would likely provoke “a blistering row” with NHS staff, teachers and civil servants who could fall into this bracket.
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Given that ministers have said they will not raise taxes for working people, that would become a tricky policy to sell – and reports suggest changes have now been ruled out by the Treasury.
Why are western — normally American, but in this case British — computer programmers so arrogant as to insist that the rest of the world conform to their organisation (“AI start-ups make money faster than software groups of the past”, Report, September 28)?
I wanted to buy a couple of books by the brilliant and eloquent theologian Father Timothy Radcliffe OP, soon to be Cardinal Radcliffe, an eminent eminence indeed. Bloomsbury publishes the books. Unfortunately, my address takes the form of 3-2-1-1111, Osaka 543-2100. It makes twisted sense in Japan where few of the higgledy-piggledy streets and lanes have names. However, Bloomsbury’s computer insists on rendering my address as 3211111 Osaka 5432100 without allowing any hyphens or even commas — which code I doubt even Bloomsbury’s computers would be able to fathom.
Postcodes in Japan are not as precise as in the UK, and the same code may cover several hundred urban metres. There are ways round, by writing Chōme (city district name), Banchi (block), Gō (house number) and apartment, preceded by the number for each, but this is clumsy, and Japan prefers Chōme etc with hyphens; and I do not know whether my credit card or bank would recognise the address thus rendered. I fear that Global Britain may be lost in foreign lanes where customs are different.
China has cracked down on businesses including real estate, technology and finance
“Now I think about it, I definitely chose the wrong industry.”
Xiao Chen*, who works in a private equity firm in China’s financial hub, Shanghai, says he is having a rough year.
For his first year in the job, he says he was paid almost 750,000 yuan ($106,200; £81,200). He was sure he would soon hit the million-yuan mark.
Three years on, he is earning half of what he made back then. His pay was frozen last year, and an annual bonus, which had been a big part of his income, vanished.
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The “glow” of the industry has worn off, he says. It had once made him “feel fancy”. Now, he is just a “finance rat”, as he and his peers are mockingly called online.
China’s once-thriving economy, which encouraged aspiration, is now sluggish. The country’s leader, Xi Jinping, has become wary of personal wealth and the challenges of widening inequality.
Crackdowns on billionaires and businesses, from real estate to technology to finance, have been accompanied by socialist-style messaging on enduring hardship and striving for China’s prosperity. Even celebrities have been told to show off less online.
Loyalty to the Communist Party and country, people are told, now trumps the personal ambition that had transformed Chinese society in the last few decades.
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Mr Chen’s swanky lifestyle has certainly felt the pinch from this U-turn. He traded a holiday in Europe for a cheaper option: South East Asia. And he says he “wouldn’t even think about” buying again from luxury brands like “Burberry or Louis Vuitton”.
But at least ordinary workers like him are less likely to find themselves in trouble with the law. Dozens of finance officials and banking bosses have been detained, including the former chairman of the Bank of China.
The industry is under pressure. While few companies have publicly admitted it, pay cuts in banking and investment firms are a hot topic on Chinese social media.
Posts about falling salaries have generated millions of views in recent months. And hashtags like “changing career from finance” and “quitting finance” have gained more than two million views on the popular social media platform Xiaohongshu.
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Some finance workers have been seeing their income shrink since the start of the pandemic but many see one viral social media post as a turning point.
In July 2022, a Xiaohongshu user sparked outrage after boasting about her 29-year-old husband’s 82,500-yuan monthly pay at top financial services company, China International Capital Corporation.
People were stunned by the huge gap between what a finance worker was getting paid and their own wages. The average monthly salary in the country’s richest city, Shanghai, was just over 12,000 yuan.
It reignited a debate about incomes in the industry that had been started by another salary-flaunting online user earlier that year.
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Those posts came just months after Xi called for “common prosperity” – a policy to narrow the growing wealth gap.
In August 2022, China’s finance ministry published new rules requiring firms to “optimise the internal income distribution and scientifically design the salary system”.
The following year, the country’s top corruption watchdog criticised the ideas of “finance elites” and the “only money matters” approach, making finance a clearer target for the country’s ongoing anti-corruption campaign.
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Shanghai is a financial hub and China’s richest city
The changes came in a sweeping but discreet way, according to Alex*, a manager at a state-controlled bank in China’s capital, Beijing.
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“You would not see the order put into written words – even if there is [an official] document it’s certainly not for people on our level to see. But everyone knows there is a cap on it [salaries] now. We just don’t know how much the cap is.”
Alex says employers are also struggling to deal with the pace of the crackdown: “In many banks, the orders could change unexpectedly fast.”
“They would issue the annual guidance in February, and by June or July, they would realise that the payment of salaries has exceeded the requirement. They then would come up with ways to set up performance goals to deduct people’s pay.”
Mr Chen says his workload has shrunk significantly as the number of companies launching shares on the stock market has fallen. Foreign investment has decreased in China, and domestic businesses have also turned cautious – because of the crackdowns and weak consumption.
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In the past his work often involved new projects that would bring money into his firm. Now his days are mostly filled with chores like organising the data from his previous projects.
“The morale of the team has been very low, the discussion behind the bosses backs are mostly negative. People are talking what to do in three to five years.”
It’s hard to estimate if people are leaving the industry in large numbers, although there have been some layoffs. Jobs are also scarce in China now, so even a lower-paying finance job is still worth keeping.
But the frustration is evident. A user on Xiaohongshu compared switching jobs to changing seats – except, he wrote, “if you stand up you might find your seat is gone.”
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Mr Chen says that it’s not just the authorities that have fallen out of love with finance workers, it’s Chinese society in general.
“We are no longer wanted even for a blind date. You would be told not to go once they hear you work in finance.”
*The names of the finance workers have been changed to protect their identities.
LONDON’s Winter Wonderland will be opening next month with some updates – a much-loved rollercoaster is set to return following a one-year hiatus, as well as other reimagined activities.
The winter attraction will run for six weeks in the capital’s Hyde Park, with a variety of attractions, activities, entertainment, and food on offer.
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London’s Winter Wonderland will open in the capital next monthCredit: Winter Wonderland
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The winter attraction is home to over 100 rides and market stallsCredit: Splash
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The Magical Ice Kingdom will also return for another year, featuring a brand-new themeCredit: Winter Wonderland
After a break from Winter Wonderland last year, the rollercoaster Wilde Maus XXL will make its return in 2024.
The 30-metre tall coaster rollercoaster features multiple twists and turns with a G force of 2.5, and the queue is even interesting – with spinning platforms and stepping stones over water.
The freezing cold bar has been brought back to London in association with Mixtons Cocktails – think DJ beats and classic cocktails with a twist.
Other popular attractions include the Giant Wheel, ice sculpting workshops, and Zippos Christmas Circus.
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Those who aren’t keen on big rides will be able to watch the Cirque Berserk show Thunderbolt – an “adrenaline-fuelled circus stunt” show performed by a troupe of daredevils.
And following a run of sell-out performances in 2023, Children’s TV Megastar Justin Fletcher, known for his role as Mr Tumble on CBeebies, will also return for 2024 – and tickets are already limited.
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Magical Ice Kingdom will have an Alice in Wonderland themeCredit: @Joshua Atkins
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Munich Looping, the world’s largest transportable rollercoaster, will be at Winter WonderlandCredit: @Joshua Atkins
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Cirque Berserk show Thunderbolt will be part of the lineupCredit: @Joshua Atkins
More than 20 new traders will be making their Winter Wonderland debut in 2024, with the site’s Christmas Market featuring a diverse range of handmade crafts.
As part of the new line-up, live demonstrations will also be hosted at the market.
Food and drinks like mulled wine, hot chocolate, and tankards of Bavarian beer can also be purchased.
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What else do I need to know?
While entry is free into Winter Wonderland in the morning and early afternoons on certain days (normally weekdays), entry prices for peak times range from £5-£7.50.
Visitors will then need to pay if they want to go on any of the rides or experience any of the other attractions.
For example, ice rink tickets cost £17 for a full-paying adult and £11 for a child and entry into the Ice Kingdom costs £13 for a full-paying adult and £11.
Fast-track tickets on the Giant Wheel cost £16 per adult and £12 per child, cheaper tickets are available for those who don’t want to purchase fast-track.
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Entry to Bar Ice cost £18 per person, with one cocktail included in the price.
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There will be over 100 rides and attractions at Winter WonderlandCredit: Winter Wonderland
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Rollercoaster Wilde Maus XXL will make its return in 2024Credit: Alamy
If you’re clever and book activities in advance online, you can get free entry into the park when you spend over £25.
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Visitors can also purchase the Santaland Unlimited Ride Pass, which gives park-goers unrestricted access to over 12 family-friendly rides, including Race-O-Rama, Santaland Express Train, Winter Spinner, and Racing Coaster – although this is three rides less than last year.
The pass costs £25, and it includes free entry to Winter Wonderland.
A new Off-Peak offer is on the cards for 2024, with off-peak visitors unlocking 20 per cent of selected Magical Ice Kingdom and Ice Skating tickets.
Winter Wonderland will run for six weeks from November 21, 2024, until January 5, 2025.
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It will be open from 10am until 10pm every day between those two dates, excluding Christmas Day.
The nearest London Underground stations to Hyde Park are Bond Street, Green Park, Knightsbridge, Marble Arch, Hyde Park Corner, Paddington, and Victoria.
Several bus routes will also get you there, and Paddington, Victoria, and Marylebone train stations are also nearby.
What’s it like to visit London’s Winter Wonderland?
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The Sun’s Travel reporter Hope Brotherton visited London’s Winter Wonderland last year, here’s what she thought…
THE smell of deep-fat fried batter wafts through the air, and bright, sometimes flashing, lights can be seen in every direction.
A mixture of pop songs and Christmas jingles also compete for some attention, which means I can only be in one place – London‘s Winter Wonderland.
It’s a sprawling maze of high-octane rollercoasters, funfair rides, wooden stalls, food vans, and other activities.
While there’s no real way to explore the festive attraction, I made a beeline for the Magical Ice Kingdom.
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Last year’s theme centred around Norse Mythology but I’m equally excited to see the Alice in Wonderland-themed ice carvings at this year’s attraction.
For me, another one of Winter Wonderland’s highlights was the Real Ice Slide – a 35m slope.
Despite being over in seconds, the Real Ice Slide was a true rush of fun.
Another one of Winter Wonderland’s highlights is the Giant Ferris Wheel, where park-goers are treated to spectacular views of both the park and the London Skyline.
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Journeys on the Ferris Wheel last around 15 minutes, making it well worth the wait.
No trip to Winter Wonderland is complete without riding at least one rollercoaster – and I opted for Munich Looping, the world’s largest transportable rollercoaster.
I gave several other rides a go, including the Haunted Mansion and the Traditional Wave Swinger.
I also had a good wander through the wooden market stalls, and I watched as other park-goers won prizes on one of the many funfair games.
We were pleased to read that Mark Malloch-Brown is inviting ideas on how the World Bank and IMF should change, 80 years on from their founding (Opinion, October 1).
There is an urgent need for reform, to meet the growing challenges of accelerating climate change, deepening inequality and debt distress. Reviews can be glacial and undermine existing reform processes. We must not let this happen but rather must add energy, speed and scale to what’s under way. We need to move from incremental change to rapid action to unlock the trillions more in financing needed by 2030.
Over the next 10 weeks there are a number of opportunities for leaders to make good on their professions of political will. At the World Bank and IMF annual meetings in October, the G20 and COP29 in November, and the International Development Association (IDA) replenishment in December, they could and should agree to the following steps:
IDA, the World Bank’s concessional fund for the poorest countries, must be replenished to a level commensurate with historically high needs, namely a real terms increase on the last replenishment — and ideally to an amount of $120bn.
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The multilateral development banks must follow the recommendations of the G20-commissioned capital adequacy framework review and adjust their risk measures to unlock hundreds of billions more in low-cost lending.
They must also review the G20’s “common framework for debt treatments” to better help heavily indebted countries. In addition, we need to see an end to all direct and indirect finance for fossil fuels and a shift in focus to sustainable renewables. The IMF should issue $650bn in new special drawing rights, its reserve currency, to help heavily indebted countries cope with climate impacts, and finally start the process of reforming IMF quotas in favour of low-income countries while removing IMF surcharges.
These are just some of the changes needed to make the Bretton Woods institutions more genuinely representative, inclusive and effective in the current age. We’re delighted to be invited to be part of this conversation. But Malloch-Brown and the political leaders and major shareholders at the multilateral development banks must hear what leaders from the global south are saying — and act on it.
Hannah Ryder CEO, Development Reimagined, Nairobi, Kenya
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David McNair Executive Director for Global Policy and Strategy, The ONE Campaign, Dubln, Ireland
Luca Bergamaschi Co-Founder ECCO, Rome, Italy
Jane Burston CEO, Clean Air Fund, London, UK
Christoph Bals Policy Director, Germanwatch, Bonn, Germany
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Jamie Drummond Founder, Sharing Strategies, London, UK
Jean McLean Convenor, Green Economy Coalition, London, UK
The government is investigating 37 UK-linked businesses for potentially breaking Russian oil sanctions – but no fines have been handed out so far, the BBC can reveal.
Financial sanctions on Russia were introduced by the UK and other Western countries following the invasion of Ukraine in 2022.
Conservative shadow foreign office minister Dame Harriett Baldwin said sanctions were designed to “shut down the sources of finance for Russia’s war machine” and “bring this illegal invasion to an end sooner”.
The Treasury said it would take action where appropriate, but pointed to the complexity of the cases as a reason they take considerable time.
The sanctions include a cap on the price of Russian oil, designed to ensure that oil can keep flowing without Russia making large profits.
The cap prohibits British businesses from facilitating the transportation of Russian oil sold above $60 a barrel.
Data obtained by the BBC using Freedom of Information laws shows the Treasury has opened investigations into 52 companies with a connection to the UK suspected of breaching the price cap since December 2022.
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As of August, 37 of those investigations were live and 15 had concluded, but no fines had been handed out.
The identities of the businesses are unknown but it’s understood some are likely to be maritime insurance firms.
Dame Harriett told the BBC “there is probably more that could be done” by the government and the oil sector itself “because it does appear that UK importers are still bringing in oil that originated in Russia”.
The anti-corruption organisation Global Witness said it was “quite astonishing” that no fines have yet been handed out, and described the oil cap as “a sort of paper tiger” that is failing to crack down on rule breaking.
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Louis Wilson, the head of fossil fuel investigations at Global Witness, called for “bold action” to be taken against companies breaching sanctions.
He said if the UK government “prevents British businesses from enabling Putin’s profiteering, then I think you’ll start to see others following that lead”.
Investigations into potential breaches of the oil cap and other financial sanctions are carried out by a Treasury unit called the Office of Financial Sanctions Implementation (OFSI).
OFSI received an extra £50m of funding in March to improve enforcement of the UK’s sanctions regime
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But Mr Wilson said companies under investigation find it “pretty easy to come by” a document that gets them out of trouble.
He described the documents as “basically promises, voluntary bits of paper” and said they can be easily obtained even if the company was involved in transporting oil sold above the price cap.
“What’s likely is either these businesses will find the paperwork that they need to get through this process, or we’ll see the UK government drop these cases quietly,” he said.
He claimed the US were reluctant to make the Western sanctions regimes harder “because they’re scared that if they do enforce the rules it will stop the Russian oil trade and that will send oil prices higher”.
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Dame Harriett said it was important that when OFSI “find deliberate wrongdoing they are exacting financial penalties”.
A spokesperson for the Treasury said it would take enforcement action “where appropriate” and it was “putting sanction breachers on notice”.
They added that the cap was reducing Russia’s tax revenues from oil, adding that data from the country’s own finance ministry showed a 30% drop last year compared to 2022.
The former chair of Parliament’s Treasury Select Committee launched an inquiry into the effectiveness of sanctions on Russia in February.
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Dame Harriett said she “received evidence that the oil price cap is being evaded by refining Russian oil in refineries based in third countries and then the oil is being exported into the UK.”
But parliamentary committees are disbanded once an election is called and the findings of the Treasury committee inquiry were never published.
It’s understood no decision has yet been made as to whether the new Treasury Select Committee will recommence the work.
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OFSI issued its first Russia-related penalty last month, when it fined a concierge company £15,000 for having a sanctioned individual on its client list.
London-based firm Integral Concierge Services was found to have made or received 26 payments that involved a person whose assets have been frozen as part of the Russia sanctions.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Executives have stepped up sales of their shares in UK-listed companies ahead of this month’s Budget, as chancellor Rachel Reeves considers increasing capital gains tax in a bid to bolster public finances.
Since Britain’s July 4 election, directors of listed companies have sold shares at an average rate of £31mn a week, more than double the £14mn pace of the previous six months, regulatory filings show.
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The total value of disposals since election day has reached around £440mn, according to the figures compiled by investment platform AJ Bell.
Government insiders have confirmed Reeves is weighing a CGT increase as part of a multibillion-pound effort to fill a hole in the public finances.
Some business owners are also speeding up plans to offload their companies altogether to avoid the potential CGT rise, according to a survey by wealth manager Evelyn Partners.
At present CGT rates on share disposals or the sales of businesses tend to range between 10 per cent and 20 per cent.
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The chancellor said in an interview with the Financial Times last week that she would not do anything that might hit growth. “We are approaching it in a responsible way and we need to make sure we aren’t reducing investment into Britain,” she said.
On Monday, Reeves and Prime Minister Sir Keir Starmer will host a global investment summit in London, insisting that Britain is a great place to do business, but the shadow of a tax-raising Budget hangs over the event.
Several executives who have sold shares told the FT they took the decision due to fears about the October 30 Budget. They cited worries that a move to raise CGT could lead to further investor outflows.
“My sale was purely down to concerns about the CGT changes,” said one executive at a London-listed firm who sold shares in September. “The chancellor’s approach of leaving the whole economy in limbo over potential changes is not at all helpful.”
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Another executive at a company quoted on London’s junior Aim market who also made disposals last month said they were worried changes in CGT could deter future investors. “People will be more reluctant to risk their capital,” they said.
The FTSE Aim All-Share index is down 3.5 per cent so far this year.
CGT, which raised £14.4bn in 2022-2023, is paid by about 350,000 people but just 12,000 of them account for two-thirds of the total intake.
The survey by Evelyn Partners also found that nearly a third of the 500 business owners who had fast-tracked their exit plans over the past year had done so because of concerns about a possible rise in CGT.
A fifth of the businesses said they were looking to accelerate an exit due to a potential cut in inheritance tax relief, which meant it could be more expensive to pass on a company to the next generation.
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“People are running out of time to make these decisions ahead of the Budget and the risk is that they panic,” said Chris Etherington, partner at accounting firm RSM UK. “Everyone has October 29 as a hard deadline.”
Independent research published on Friday by the Centre for the Analysis of Taxation suggested a CGT overhaul could raise up to £14bn a year for the government.
The study looked at the possible effects of a comprehensive reform package that broadens the tax base and brings CGT rates into line with income tax.
Anna Leach, chief economist at the Institute of Directors, said businesses were concerned they would bear the brunt of tax changes after Labour ruled out rises for working people. “They have ruled out everybody else,” she said.
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“Ambiguity around tax increases is hitting confidence and all the doom and gloom from government is making businesses ask whether the pain is worth it,” she added.
Portfolio managers and tax planners said that Labour’s silence ahead of a crunch fiscal event that will set the tone of the administration was leading clients to “fill the void”.
Laura Foll, a fund manager at Janus Henderson, added that the “information gap” about Labour’s plans, together with the government’s negative tone about public finances, had led investors to plan for a “worst-case scenario”.
The government says it needs to fill a £22bn “black hole” left by the previous Conservative administration.
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In response to questions about the share sales, the Treasury said it was committed to encouraging companies to grow and list in the UK.
“The chancellor makes decisions on tax policy at fiscal events,” it added. “We do not comment on speculation around tax.”
Additional reporting by George Parker and Sam Fleming
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