Budget has not turned out to be bad for pensioners overall, although the government had been rebuked for allowing endless speculation, which had prompted many people to make “knee-jerk” decisions that could undermine the adequacy of their pensions, stated Rathbones financial planning divisional lead Rebecca Williams.
Williams said: “Lesson learned: don’t react to noise. Speculation isn’t policy, and rash decisions can cost you comfort in retirement.
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“The proposed wealth tax is significant. It could make pensioners think twice about selling the family home. Those who’ve lived in the same house for decades, now empty-nesters, might choose to sell before the new tax kicks in from April 2028 – potentially easing supply issues higher up the property ladder in hotspot areas.”
Williams noted that one interesting nugget from the Budget speech was the confirmation that the state pension would not be dragged into income tax territory, but only on the condition that there were no other sources of income.
She added that, for most pensioners, this meant they were still on course to pay income tax on state pension payments from April 2027.
Williams noted that estate planning was becoming “trickier”, explaining that beyond fiscal drag there were new inheritance tax changes on the way, including reduced Business and Agricultural Property Reliefs, the inclusion of pensions from 2027, and frozen thresholds.
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By GlobalDataWilliams added: “The Treasury wants a bigger slice of the “great wealth transfer.” Smart planning starts with knowing what you can afford to give away, backed by a lifetime cashflow plan. Use today’s allowances and reliefs – tax changes rarely go backwards, so act now and document everything.”
“The burning question now is: will pensions and inheritance face more raids? With fiscal headroom stretched to £22 billion, there’s hope smash-and-grab policies stay off the table. The real win? Driving productivity and growth to avoid stagnation and fund prosperity.”
