Pensioners are taking their money ‘off grid’ to beat the desperate Chancellor’s clutches
Daily Telegraph 06/11/25 Link
Nothing makes politicians angrier than the public not doing as they’re told. Just look at the Brexit vote, the election of Donald Trump and countless other examples.
As Rachel Reeves stares down the barrel of a Budget that could very well be the last act of her political career, she is running out of options to squeeze us for cash.
The disastrous winter fuel policy barely raised any money – not least because thousands of people who weren’t signed up to pension credit began claiming the benefit so as not to lose access to the payments.
The biggest personal taxation change at the 2024 Budget was the inclusion of unspent pensions into the purview of inheritance tax. As a result, anyone with decent pension savings in their 60s and older will have started hurriedly spending or giving away their money to avoid HMRC taking a cut when they die.
This is the problem facing all chancellors – it’s very hard to predict the behavioural changes sparked by altering tax.
Several readers have reported going “off grid” – battening down the hatches until Labour is turfed out at the next election. That’s not likely to be until the summer of 2029 as the Government will almost certainly drag out its term until the very last possible moment.
Money reader Mark Bull said: “So many hard-working people I know are retiring early… many are scared witless of losing their pension tax-free cash, so are going off grid, living on tax-free savings and pension tax-free cash... with a view to seeing what the world is like post-Labour.”
Another reader wrote that they have taken their tax-free lump sum and put the cash into several Isas, where gains and withdrawals are tax-free. They’re refusing to draw any income that does attract taxes so as not to trip into the higher 40p band.
“Feels wrong somehow,” they write, “as I am still at an age to spend it outlandishly – but I will not do so until Thieves & Co are in the rear view mirror.”
This feeling, and commitment to ensuring as little as possible is given over to the Government, is now the dominant feeling across the country. Reeves is finally understanding that people will not just roll over and give up their assets to a government they have no faith will spend it wisely; certainly not while the benefits bill spirals and there are no discernible improvements in public services.
That means raising taxes that are harder for people to avoid with simple tax planning.
In an unusually timed, and frankly bizarre, pre-Budget speech this week, the Chancellor yet again laid the groundwork for a painful series of tax rises to be announced later this month.
Her comments – “we will all have to contribute to that effort… each of us must do our bit” – have been read as indicating broad tax rises. It looks increasingly likely that this means there will be a manifesto-breaking rise in income tax that would affect everyone with an income of more than £12,570 a year.
Another option believed to be under serious consideration is raising income tax, but simultaneously reducing employee National Insurance by the same amount. This idea, which is being pushed by the increasingly influential left-wing Resolution Foundation think tank, would protect workers but target pensioners and landlords.
As Reeves grows more desperate and willing to break her own promises, there are fewer and fewer places left to hide.
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