The Labour Party will not reintroduce the pensions lifetime allowance if it wins the general election, reports BBC News. Rachel Reeves had previously suggested that the LTA would be brought back, with certain exceptions for some key workers (NHS doctors in particular). Speaking in the House of Commons as part of the Budget debate in March 2023, Reeves said: ‘Labour will reverse the changes to tax-free pension allowances. It is the wrong priority, at the wrong time, for the wrong people. Instead, we would create a targeted scheme to encourage doctors to work overtime and not to retire early.’
In a report weighing up the pros and cons of potential reinstatement, the Institute for Fiscal Studies suggests a number of options that an incoming government might consider, and that any reform should be implemented ‘swiftly’.
That policy now appears to have been ruled out, with the Financial Times reporting that the proposal would ‘add uncertainty and be complex to reintroduce’.
Wealth management specialists, Charles Stanley, point out that this does not necessarily mean there will be no further changes to the pensions tax rules after the election: ‘It’s possible that recent fresh clarity on the LTA makes other pension changes more likely. One facet likely to be looked at by a Labour government is the ability to pass pension pots on inheritance tax (IHT) free to nominated beneficiaries. With no LTA there is currently potential to cascade pension wealth down the generations with income tax paid on withdrawals, should they be taken. It would seem likely that with the LTA permanently removed by both major parties this area could be inspected for reform.’
The Labour Party will not reintroduce the pensions lifetime allowance if it wins the general election, reports BBC News. Rachel Reeves had previously suggested that the LTA would be brought back, with certain exceptions for some key workers (NHS doctors in particular). Speaking in the House of Commons as part of the Budget debate in March 2023, Reeves said: ‘Labour will reverse the changes to tax-free pension allowances. It is the wrong priority, at the wrong time, for the wrong people. Instead, we would create a targeted scheme to encourage doctors to work overtime and not to retire early.’
In a report weighing up the pros and cons of potential reinstatement, the Institute for Fiscal Studies suggests a number of options that an incoming government might consider, and that any reform should be implemented ‘swiftly’.
That policy now appears to have been ruled out, with the Financial Times reporting that the proposal would ‘add uncertainty and be complex to reintroduce’.
Wealth management specialists, Charles Stanley, point out that this does not necessarily mean there will be no further changes to the pensions tax rules after the election: ‘It’s possible that recent fresh clarity on the LTA makes other pension changes more likely. One facet likely to be looked at by a Labour government is the ability to pass pension pots on inheritance tax (IHT) free to nominated beneficiaries. With no LTA there is currently potential to cascade pension wealth down the generations with income tax paid on withdrawals, should they be taken. It would seem likely that with the LTA permanently removed by both major parties this area could be inspected for reform.’
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