Rachel Reeves plotting major 'pensions tax raid' in huge blow to older Brits

Rachel Reeves will look to launch a “pensions tax raid” to help fill a huge black hole in public finances, an expert has warned. There are warnings the Chancellor may need to raise taxes again in the autumn Budget to plug a black hole of up to £51 billion in the public finances.

Reports suggest she must now find around £5 billion in tax rises or spending cuts to cover Government u-turns such as the controversial welfare bill. Many experts, including Elliott Jordan-Doak from Pantheon Macroeconomics, believe tax increases are now inevitable. The senior economist said public finances are “chronically weak” and warned of a likely new levy on pensions so the Government can stay within its fiscal rules.

He said: “The Chancellor will still have to raise taxes in October despite borrowing matching official forecasts.

“The big picture remains that the public finances are in chronically weak condition.

“We think the Chancellor will need to resort to sin and stealth tax hikes, duty increases, and a pensions tax raid in order to meet her fiscal rules if she wants to meet her pledge of keeping headline tax rates unchanged.”

Economists are still widely warning tax raises are on the horizon despite the positive news that UK borrowing last month was lower than expected.

Official figures released on Thursday showed Government borrowing slowed to £1.1 billion in July, providing some relief for the Chancellor.

The Office for National Statistics said the figure, which was £2.3 billion less than the same month a year earlier, is the lowest July borrowing figure for three years.

The National Institute of Economic and Social Research (NIESR) think tank has warned there could be a £51 billion black hole in public finances.

Labour is reportedly looking at hitting owners of high-value houses with capital gains tax (CGT) when they sell their family home as part of measures to plug the gap.

The Guardian also reported that the Government is considering an overhaul of the current system on stamp duty on property purchases.

The Government has ruled out increasing income tax, employees’ national insurance contributions and VAT, restricting Ms Reeves’ options when it comes to raising money, prompting many to warn tax hikes are inevitable.