The Chancellor will deliver the eagerly-awaited Labour Party Autumn Budget on November 26, after weeks of rumour and speculation.
HMRC set to make unwelcome change for millions who are ‘near retirement’
The Labour Party has been issued a stark warning over a planned Budget change for people “near retirement”. The Chancellor will deliver the eagerly-awaited Labour Party Autumn Budget on November 26, after weeks of rumour and speculation.
Ahead of the landmark fiscal address, PensionBee’s Lisa Picardo has warned Rachel Reeves over a series of changes to HMRC tax, including reducing the pension tax-free lump sum and removing higher rate relief on pension contributions.
Two of the four other options Ms Reeves could make in conjunction with the tax authority, His Majesty Revenue and Customs, or HMRC, include capping or scrapping salary sacrifice and further reforms to inheritance tax (IHT), Ms Picardo has warned. The warning comes with the Autumn Statement now just two weeks away.
READ MORE There’s one group of drivers you have to feel so sorry for in new UK pay-per-mile car tax
The personal finance expert has warned Ms Reeves over the potential reduction of the pension tax-free lump sum, currently capped at £268,275.
“The pension tax-free lump sum is a cornerstone of retirement planning, which many have factored into their planning,” Ms Picardo said.
“Limiting the total tax-free cash of £268,275 to a lower amount would be hugely unpopular, especially for those near retirement,” she warned.
“Tax relief on pensions is a critical element of encouraging people to save for the future, providing a much needed boost,” Ms Picardo explained.
“This ‘pension death tax’ would represent a major departure from the current rules, and continues to receive opposition from the public and the industry,” Ms Picardo went on to also add.
And a crackdown on salary sacrifice pension schemes could hit the take-home pay of millions, The Society of Pension Professionals (SPP), which represents advisers and trustees, says.
Scott Gallacher, Director at Leicester-based Rowley Turton, added: “A crackdown on salary sacrifice pension schemes would be deeply disappointing and, frankly, counterproductive.
“Time and again, governments talk about concerns over retirement poverty and Britain’s need to save more for the future.
“Yet, short-term Treasury thinking so often overrides this laudable aim. Instead of encouraging long-term saving and financial resilience, we see a steady erosion of incentives through restrictions on pension contributions, limits on tax-free cash, talk of reducing the Cash ISA allowance, and cuts to Capital Gains Tax and dividend allowances.
“Now, even salary sacrifice—a simple, efficient way for ordinary working people to save for retirement—is under threat. If the government is serious about tackling the looming pensions crisis, it needs to stop penalising those who take responsibility for their own financial future.”