UK Faces Pension Crisis? Income Tax Reform Coming April 2025; Donald Trump announces 30% tariff on imports from EU
- TBA
- Jul 14
- 5 min read
UK's pension triple lock to cost three times more
According to the latest report by the UK Office for Budget Responsibility (OBR), annual spending on the country's "Triple Lock" pension policy is projected to reach £15.5 billion by 2030—three times more than initially anticipated—raising serious concerns over the long-term sustainability of public finances.
What is the "Triple Lock"?
Introduced in 2011, the Triple Lock guarantees that the UK state pension increases each year by the highest of three measures: inflation, average earnings growth, or 2.5%.
The OBR notes that this policy, combined with a growing number of pensioners, has pushed state pension spending from around 2% of GDP in the 1940s to approximately 5% today—equivalent to £138 billion. By the early 2070s, this figure is expected to rise to 7.7% of GDP.
Richard Hughes, Chair of the OBR, stated: "The Triple Lock is just one of many ageing-related spending pressures. In the long run, the UK’s public finances are on an unsustainable path."
The report also warns that government debt will continue to rise, partly due to recent reversals of planned spending cuts and the reinstatement of benefits such as the Winter Fuel Payment.
Currently, state pensions are the second-largest area of UK government spending after healthcare. Over the past 13 years, pension increases driven by non-wage factors have occurred eight times—highlighting the cost volatility tied to inflation. In April 2025, pensions will rise by 4.1%, reflecting wage growth:
New State Pension (for those retiring after 2016): £230.25 per week, an annual increase of £472
Basic State Pension (for those retiring before 2016): £176.45 per week, an annual increase of £363
While the Labour government has pledged to retain the Triple Lock during this parliamentary term, debate continues over whether the policy is financially justified.
The independent Institute for Fiscal Studies (IFS) has recently recommended scrapping the Triple Lock in favor of linking pensions to inflation, with growth targets aligned to average income levels, to build a fairer and more sustainable pension system. However, many elderly advocacy groups strongly oppose any change, arguing that weakening the policy would push more pensioners into hardship amid the ongoing cost-of-living crisis.
Donald Trump announces 30% tariff on imports from EU
Last week, U.S. President Donald Trump issued a statement on his social media platform, Truth Social, announcing that a 30% tariff will be imposed on imports from the European Union starting August 1. The move sparked an immediate and forceful response from EU officials.
Trump stated that the U.S.–EU trade relationship has long been “imbalanced,” with the U.S. facing a massive trade deficit that he described as a national security threat. In a letter addressed to the EU, he wrote: “Our trade relationship with the European Union has been under discussion for many years. We must put an end to this long-standing, large-scale, and persistent trade deficit. This situation is caused by your tariff regime and non-tariff barriers. Our relationship is far from reciprocal.”
The 30% tariff will affect a wide range of high-value European goods—including French cheese, Italian leather, German electronics, and Spanish pharmaceuticals—which are expected to see significant price hikes in the U.S. market.
European Commission President Ursula von der Leyen responded swiftly, warning that if the U.S. proceeds with the tariff plan, the EU will take "proportional and reciprocal countermeasures." She stated: “The EU is one of the world’s most open and fair economies. We remain willing to negotiate and reach an agreement before August 1. But if the U.S. insists on moving forward, we will take all necessary steps to protect EU interests.”
She further warned that such tariffs could seriously disrupt critical transatlantic supply chains.
In a parallel move, Trump also announced a 30% tariff on Mexican goods, citing Mexico’s failure to adequately curb drug trafficking. Mexico’s Ministry of Economy confirmed it is in ongoing discussions with the U.S. in hopes of reaching an alternative solution before the August 1 deadline.
The U.S. had previously announced a 20% tariff on EU goods but postponed its implementation. Currently, EU products are subject to a standard 10% tariff. In May, amid stalled trade talks, Trump had threatened to raise tariffs to 50%, though that increase was delayed at the last minute.
Despite ongoing negotiations, no consensus has been reached on a U.S.–EU trade agreement. The EU has warned that if talks fail, it is prepared to impose tariffs on hundreds of U.S. products, including beef, auto parts, beer, and Boeing aircraft.
HMRC confirms new income tax change starts next April
The UK tax authority, HMRC, has officially confirmed that the Making Tax Digital (MTD) initiative will come into effect on 6 April 2026 for sole traders and landlords with annual income over £50,000.
This marks the most significant reform to the tax system since the introduction of Self Assessment in 1997, ushering in a fully digital era for personal income tax reporting in the UK.
Starting 6 April 2026, all sole traders and landlords with annual gross income above £50,000 will be required to digitally record their income and expenses and submit quarterly updates using MTD-compatible software.
The rollout will expand further:
From April 2027, those earning over £30,000 will be included.
By 2028, the threshold will drop again to include those earning over £20,000.
The MTD scheme aims to increase efficiency, reduce errors, and give taxpayers greater year-round visibility of their tax obligations—eliminating the stress of last-minute submissions.
Important Notes:
The "qualifying income" under MTD refers to total gross income before expenses—including earnings from self-employment and property rentals.
For businesses already registered for VAT, enrollment in MTD for VAT was automatic.
An independent report found that over 2 million businesses have benefited from the MTD for VAT system:
69% reported at least one positive impact,
67% said it helped reduce record-keeping errors.
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