The Chancellor’s Budget came with a number of announcements, but was lighter on tax rises than some had anticipated. A key announcement came regarding pensions, as the lifetime allowance will be frozen. The current limit of £1,073,100 will remain in place until 2024, capping how much savers can put in without accruing tax bills. It was due to rise by 0.5 percent in the new tax year and would have been some £76,000 higher by 2025 before the freeze, based on the Office for Budget Responsibility’s inflation forecasts. Mr Sunak also said that corporation tax will rise to 25 percent, but business will also get incentives worth £25billion.
But economist from Tax Research UK, Richard Murphy, tells Express.co.uk that Mr Sunak will look to gradually rise taxes by freezing allowances, just as he did with pensions.
He said: “There are going to be small, steady increases on those on low incomes.
“Those increases are simply because he hasn’t changed the bands where tax rates change, so more people will gradually be paying higher rate tax.
“He is going to collect extra money by simply freezing allowances, it’s a quiet way of collecting taxes and a bit sneaky.”
Another expert, Aegon pensions director Steven Cameron , told Express.co.uk this week that the pension triple lock could be removed by Mr Sunak despite it being a manifesto pledge.
He said: “Sunak did say yesterday that it is too early to make detailed fiscal policy announcements. We still don’t know the full costs of furlough and other support schemes. We still don’t know the full impact on the economy.
“I do expect he will be making further changes which could be of a detailed and wide-ranging nature. We shouldn’t assume that because he didn’t announce things yesterday, he won’t be thinking about them as longer term measures.
“We have got a manifesto commitment on the pension triple lock and tax triple lock, with all of these locks he’s got more locks than Houdini to grapple with.
“At some point, the Government might decide we have to be open with the public and say, ‘If we stick with these manifesto commitment we will have too many restrictions to do what is right to do.’
READ MORE: Big business ‘won’t pay for pandemic’ as Sunak gives £25bn handout
For 2022, the Bank predicts growth of 7.25 percent, up from a previously forecast 6.25 percent.
Bank of England governor Andrew Bailey said: “COVID vaccination programmes have begun in a number of countries, including the UK, which has improved the economic outlook.
“Nevertheless, recent activity has been affected by an increase in COVID cases, including from newly identified strains of the virus, and the associated reimposition of restrictions.”