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<\/p>\nFew were spared higher taxes in the chancellor\u2019s second budget this week. Workers, pensioners, savers, landlords, investors and electric vehicle drivers were among those who will be hardest hit by the chancellor\u2019s attempt to balance the fiscal books. <\/p>\n
Rachel Reeves asked \u201cordinary people to pay a little bit more\u201d \u2014 but many feel that they are being taxed from all angles, and are exasperated by the relentless squeeze. Here\u2019s what they told Times Money. <\/p>\n
Zahid Razzaq, 41, came late to saving for his retirement. The IT contractor started putting money in his pension three years ago and has been making the most of a salary sacrifice scheme to boost his retirement pot.<\/p>\n
From 2029 the amount that a worker can pay into their pensions via salary sacrifice while still benefiting from national insurance savings will be capped at \u00a32,000 a year. The government expects this to raise \u00a34.7 billion in the 2029-30 tax year. <\/p>\n
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Zahid Razzaq plans to pay as much as possible into his pension before the changes kick in<\/p>\n
Razzaq, who has three children, earned six-figures for his latest contract, but paid himself minimum wage and put most of the rest into a pension with PensionBee. <\/p>\n
He was keen to make the most of the \u00a360,000 limit on how much you can pay into a pension each year while still getting income tax relief. He carried forward unused allowances from the past three years, which allowed him to pay in more. His pension contributions also reduced his taxable income, and without them he would have paid the 40 per cent higher rate of tax. <\/p>\n
Razzaq said he will use salary sacrifice as much as possible before the national insurance relief on his salary sacrifice contributions is reduced in April 2029, but after that he may stop paying into his pension entirely.<\/p>\n
This is despite the fact that pension contributions will still be eligible for income tax relief. <\/p>\n
\u2022 How to beat the pension tax raid on salary sacrifice<\/a><\/p>\n Razzaq said: \u201cIt\u2019s still good but not as attractive as it is now, so I will have to work out nearer the time if I can make better use of the funds elsewhere, with better returns.<\/p>\n \u201cI would rather have the funds in my hands, then I can do what I want with them.\u201d <\/p>\n Steve Webb, a former pensions minister, said that the more than three-year delay before the change is implemented would give businesses time to change the way they pay pensions. <\/p>\n \u201cThere is a high probability that this policy will only raise a fraction of the amount expected by the chancellor. It creates a huge opportunity for firms to restructure the way that they offer and pay pensions to mitigate or eliminate this new charge,\u201d Webb said.<\/p>\n HM Revenue & Customs said earlier this year that some would remove salary sacrifice for its employees and revert to net-pay contributions.<\/p>\n Razzaq\u2019s wife is a stay-at-home mum and he said he feels pressure to provide for them both in their later years. <\/p>\n \u201cThese decisions today block progression for workers and businesses alike. At a time when long-term saving should be encouraged, this measure does the opposite.\u201d<\/p>\n
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