Mini Budget 22: Income tax cuts drive pension contribution decisions

For low earners ‘reduction in relief will be real terms reduction in their pensions’

Ayesha Venkataraman
clock • 4 min read

Chancellor Kwasi Kwarteng announced the scrapping of the 45% top rate of income tax for high earners, as well as a one percentage point cut to the basic rate of income tax from 20p to 19p in April 2023, which could drive considerations on when to maximise pension contributions, according to experts.

The cuts were announced during the Mini Budget today (23 September), setting the top rate of income tax for high earners at 40% in a bid to simplify the tax system and make the UK more competitive. The additional rate of income tax applied to earners of £150,000 and over. The government will also bring forward the one percentage point cut to the basic rate of income tax from 20p to 19p in April 2023, 12 months earlier than planned, the chancellor announced.  According to a report released alongside the speech, the one percentage point cut to the basic rate of income tax will save £5bn...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Tax planning

Autumn Budget changes making advisers consider trusts for IHT planning

Autumn Budget changes making advisers consider trusts for IHT planning

Uptick in client concern about intergenerational planning

Isabel Baxter
clock 05 June 2025 • 2 min read
Partner Content: What do advisers need to do to help clients with the great wealth transfer?

Partner Content: What do advisers need to do to help clients with the great wealth transfer?

Access the Professional Adviser educational content portal

Professional Adviser
clock 04 June 2025 • 1 min read
Thinking outside the tax box: The need for a modern approach

Thinking outside the tax box: The need for a modern approach

'Act now to ensure clients are resilient and well-positioned for the future’

Andrew Aldridge
clock 30 May 2025 • 4 min read