Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Labour Abandons Pension Lifetime Cap Reinstatement in £800m U-turn

by June 10, 2024
June 10, 2024
Labour Abandons Pension Lifetime Cap Reinstatement in £800m U-turn

Labour has reversed its plan to reintroduce the pension lifetime allowance, sparking claims from the Tories of a significant financial “black hole” in Labour’s budget.

The U-turn, valued at £800 million, sees Rachel Reeves, the shadow chancellor, abandoning the pledge to reinstate the lifetime cap on tax-free pension savings.

Labour asserts that this policy reversal will not impact its spending plans, as the expected revenue was not included in their budget calculations. However, the Conservatives estimate that this decision will add billions to what they claim is a £40 billion deficit in Labour’s financial plans.

The lifetime allowance, which was £1.073 million, was abolished by Chancellor Jeremy Hunt in 2023 to retain experienced NHS staff who were retiring to avoid hefty tax bills. Initially, Reeves promised to reverse this, labelling it a “tax cut for the wealthiest.” Despite assurances to protect doctors, the policy prompted concerns of an NHS staff exodus.

The Office for Budget Responsibility noted that abolishing the cap amounted to an annual tax cut of £800 million. However, Labour has now scrapped its plan to reintroduce the cap to avoid further confusion over what they describe as the Conservatives’ “botched” policy, which has left many investors uncertain due to legislative errors.

A Labour source told the Financial Times: “The Conservatives have botched their policy of abolishing the lifetime allowance, with thousands of people approaching retirement being left in limbo because of errors in legislation.” They added that Reeves would “sort out the mess” and prioritise bringing stability and certainty to the economy.

Laura Trott, the Chief Secretary to the Treasury, argued that this reversal would add another £3.2 billion to Labour’s financial deficit. She accused Labour of planning a “raid” on pensions by not adopting the Conservatives’ “triple lock plus” policy, which protects the state pension from tax.

Trott stated, “Despite this U-turn, which adds another £3.2 billion to their £38.5 billion black hole, Labour have failed to rule out a swathe of pensions taxes and their retirement tax will mean the state pension being subject to income tax for the first time ever.” She further claimed that Labour’s approach would make retirements less secure.

Labour’s decision appears to be an attempt to counter accusations of planning a tax increase, with Sir Keir Starmer having already ruled out rises in income tax, National Insurance, or VAT. The Tories have centred their election campaign on tax policies, claiming Labour plans to increase the financial burden on families by £2,000 to cover their spending plans.

Sir Keir Starmer has dismissed these claims as “deliberate” lies, insisting that all Labour policies are “fully-costed and fully funded.” Confirming the decision not to reinstate the cap, Bridget Phillipson, the shadow education secretary, emphasised the need for stability, stating on Sky News, “It wouldn’t have been our priority to make that change but the Government have created an awful lot of uncertainty for people who are looking towards retirement so no, we wouldn’t be bringing that back and that is about making sure we have got stability and security for people going into this election.”

Read more:
Labour Abandons Pension Lifetime Cap Reinstatement in £800m U-turn

0
FacebookTwitterGoogle +Pinterest
previous post
Labour’s Tax Policy on Private Schools to Drive Up House Prices Near Top State Schools
next post
President Biden’s Magical Thinking in the Middle East

You may also like

Open letter calls on Grant Shapps to boost...

January 25, 2023

AI Skills Gap putting Public Sector projects in...

April 12, 2024

8 Strategies to Quickly Grow Your Business

March 21, 2023

EU announces €4bn aid deal to back battery...

January 9, 2024

The Benefits of Online Faxing for Efficient Business...

December 2, 2024

Viktar Prakapenya Evaluates the Impact of Technology on...

August 4, 2022

UK rents slip for the first time since...

January 28, 2025

China strikes back with tariffs on US imports...

February 4, 2025

Getting To Know You: Emily Jeffrey-Barrett, Co-founder of...

August 27, 2024

Sainsbury’s launches EV charging business to give ‘smart...

January 12, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • HMRC inheritance tax investigations surge 37% as treasury seeks to plug revenue gap

      June 9, 2025
    • Believ secures £300m to roll out 30,000 public EV charge points across the UK

      June 9, 2025
    • US and China hold London talks to ease trade war tensions

      June 9, 2025
    • British fathers urged to join landmark ‘dad strike’ over poor paternity leave

      June 9, 2025
    • IVF parents should have right to paid fertility leave, says GMB union

      June 9, 2025
    • Reform UK clashes with Bank of England over interest payments to lenders

      June 9, 2025

    Categories

    • Business (8,158)
    • Investing (2,019)
    • Politics (15,571)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved