The other major announcement concerned the so-called ‘Triple Lock’. This ensures that the state pension is supposed to increase every year in line with whichever of inflation, the average wage increase or 2.5% is the highest.
The Conservative manifesto at the 2019 election said that the Triple Lock would remain in place for the duration of this Parliament. However, and probably quite sensibly in the light of subsequent events, this is being suspended for a year.
State pensions will continue to rise by whichever if the greater between inflation or the 2.5%.
But any link to average wage growth has been removed for a year – this is due to wage growth being 8.3% in the three months to July 2021 due to the impact of coronavirus on wages in the previous year.
All of which means that Chancellor Rishi Sunak is now presiding over some of the highest levels of taxation in UK economic history – a direction of travel that seems set for the foreseeable future with tax receipts on track to hit 35% of GDP.
As you would expect, the team at Phillip Bates & Co Financial Services will consider all of our clients’ portfolios in the light of these announcements and whether any changes need to be made to ensure the best tax efficiency in the short and longer term.