Autumn Budget 2025: pension tax raid ‘almost inevitable’

Financial advisor claims pensions are a likely target for the chancellor – even though any move could prove counterproductive.

The chancellor is highly likely to target pensions in next month’s Budget, it has been claimed.

A lack of economic growth combined with soaring borrowing costs makes a tax raid on people’s nest eggs “almost inevitable”, according to financial advisors deVere Group.

It pointed out that public borrowing reached £20.2 billion in September, the highest since the pandemic-affected 2020 total.

Total borrowing for the first half of the fiscal year stands at almost £100 billion, which is significantly higher than originally forecast.

This means the chancellor will be looking to raise yet more cash from the public, despite the fact that tax bills are already nearing their highest levels seen since World War 2.

“The Government’s borrowing costs are running 10s of billions ahead of projections,” the deVere Group said in a release.

“Combine that with ambitious spending commitments, and it becomes increasingly clear that the Treasury will be hunting for new revenue.”

Pensioners ‘an easy target’

Nigel Green, chief executive at deVere Group, believes the stage is set “for a politically risky and economically damaging move against pension savings.”

“When the Treasury finds itself under this kind of pressure, pensions are often first in line.

“They’re seen as an easy source of revenue that can be tapped quickly, even if the long-term consequences are severe.”

He added that history has shown pensioners to be "the easiest targets" for tax raises, citing examples such as the frozen allowances and lifetime limit changes.

“The political calculation is that they’re less likely to shift their financial arrangements or take to the streets, but that calculation underestimates how much confidence and capital are destroyed in the process,” he warned, adding that targeting pensions would be counterproductive.

“Undermining confidence in long-term saving would push future generations to rely more heavily on the state, not less,” said Green.

“It would choke off investment flows into British industry that come from pension funds, weakening the country’s growth potential just when it needs to be strengthened.”

He said his company has already reported an increase in clients seeking to review their retirement strategies ahead of the Budget.

“People can sense what’s coming,” he said.

“When Treasury officials refuse to rule out tax rises, it usually means they are being discussed seriously behind closed doors.

“Anyone with retirement savings should be acting now to secure legitimate, government-approved solutions that protect their position before the rules change.”

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