Threats to PCLS in the budget?

randompenitent

Idle speculation: Does it seem likely that the chancellor will take an axe to the tax free lump sum in the forthcoming budget?

Some speculation in the Telegraph at the weekend: https://www.telegraph.co.uk/money/consumer-affairs/taken-300000-pension-rishi-sunak-taxes-away/ (Not my usual newspaper so I've not managed to read the full article, but the gist is that the tax free lump sum could disappear.  Other outcomes are obviously possible.)

This is definitely a topic of interest for me having retired at the start of the month, but not yet having taken any PCLS. Any opinions?

NedS

These articles are normal in the weeks approaching the budget. Only the chancellor really knows and he will tell the rest of us on March 3rd. Tune in after PM's questions to find out first hand.

Alexland

randompenitent said:

Not my usual newspaper so I've not managed to read the full article

Right click on the webpage, view source and the full article is there about 1/3rd down the HTML.

molerat

Tinkering with the PCLS affects everyone, tinkering with contribution limits and tax reliefs only affects "the rich", which direction is most likely ?

Class 2s though have got to be on the radar this time around.

Albermarle

The usual answer to this speculation is that it is probably safe as it is very popular . Many people ( especially those on lower income, but not exclusively )  see it as a kind of retirement bonus to pay for a new car , holidays etc .
I suppose it is possible that the max amount ( around £270K ) could be further restricted by reducing the Lifetime Allowance again, but the amounts saved would not be that great .
Reducing the 40% tax relief on the way in is  mentioned every year as a likely target , but so far nothing has changed .

dunstonh

Shall we just copy and paste the responses that have been made for the last 33 years every time a budget is due?

randompenitent

dunstonh said:

Shall we just copy and paste the responses that have been made for the last 33 years every time a budget is due?

Seems fair enough. (But why only the last 33 years?)

Durban

I am a basic tax rate payer.  I would quite like it if there was a flat rate of pension tax relief , say of 30%.

I believe that was mooted some years ago. I doubt it will happen.  

Unfair to higher rate tax payers I know , but good for me 

Albermarle

Durban said:

I am a basic tax rate payer.  I would quite like it if there was a flat rate of pension tax relief , say of 30%.

I believe that was mooted some years ago. I doubt it will happen.  

Unfair to higher rate tax payers I know , but good for me 

Sounds fairer overall . I understand though that it could be difficult to implement and may even cost the Chancellor money .

NedS

molerat said:

Tinkering with the PCLS affects everyone, tinkering with contribution limits and tax reliefs only affects "the rich", which direction is most likely ?

Class 2s though have got to be on the radar this time around.

The article talks about potentially capping the PCLS so that only those with larger pots are affected (i.e, "the rich"). The article speculates this could be done for pot sizes above £500,000 thus limiting tax free cash to £125,000 per person's lifetime. Unlike some of the previous stories doing the rounds, this one doesn't appear to have come from a Treasury leak floating the idea, but rather the Telegraph's own reporting.

Mick70

It is asking for a subscription in order to read the article ?

Tax free lump sums would be an easy target i guess, but end of day it is purely speculation,  the 40k annual allowance being frozen is basically eroding it every year anyway,  they could do same with the Lifetime Allowance rather than raising it each year. If you seek to stop the 40% tax relief then possibly more employees would simply ask for salary sacrifice schemes , so you would need to tackle both ?
End of the day pensions wont raise huge sums for the treasury and they don't want to deter younger people from investing in pensions and relying on the state pension instead .
However these are strange times, so Nobody knows , probably not even The Chancellor himself,  yet .
They may lower the 40% income tax bracket , who knows.
Many also now have second homes to rent out and use as pensions and this trend is growing  , this could be another target ?
Im sure over coming weeks the mail and express will have plenty of news articles/rumours on it