Following Labour’s historic win in last night’s General Election, many of my clients will be pondering what changes might lie ahead for their taxes. Rachel Reeves, the incoming Chancellor, has ruled out increasing taxes on ‘working people’, but who does that actually exclude? – even King Charles works!
BUT, many other taxes could be increased to enable Labour to meet its spending commitments. I will resist the temptation to list the possibilities here because it would just be speculation. However, a radio interview Keir Starmer gave last week provided some welcome clarity on one possible option. In answer to a question, he appeared to suggest that the 25% tax-free lump sum that individuals can take from their personal pensions was under threat.
Amid confusion over Starmer's statement, the Labour leader’s office issued a statement clarifying the party’s position. The statement said;
‘The ability to withdraw 25% of your pension as a tax-free lump sum is a permanent feature of the tax system, and Labour is not planning to change this.’
The possible removal of the 25% tax-free lump sum has been a topic of conversation prior to every Budget since I came into financial services some 44 years ago, so this clarity at a time of great political change is extremely helpful for those planning their retirement.
I hope you found the above interesting. As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.
Yours sincerely,
Graham Ponting CFP Chartered MCSI
Managing Partner
