No change to tax free cash on 26 November

Marcon

https://www.telegraph.co.uk/money/pensions/news/treasury-rules-out-pensions-lump-sum-raid/?WT.mc_id=e_DM732843&WT.tsrc=email&etype=Edi_Mny_New&utmsource=email&utm_medium=Edi_Mny_New20251112&utm_campaign=DM732843

michaels

I assume that we are supposed to be grateful that they are only putting up tax by 2% - hard previously working and saved their money families are not the same as hard working families.

And for those of us who paid NI on the way in - yes we can double taxation it on the way out too.

Brie

can't access the article due to a pay wall - can you give us the highlights please?

Marcon

Brie said:

can't access the article due to a pay wall - can you give us the highlights please?

Rachel Reeves will not cut the tax-free pension lump sum limit in the Budget this month, officials have confirmed.

The Treasury has ruled out making changes to the amount of money that can be taken from a pension without incurring income tax, amid reports of panicked withdrawals from retirement pots.

.....

However, Treasury officials confirmed to The Telegraph that Ms Reeves will not make any cuts to the limit on Nov 26.

The decision follows reports of retirees rushing to draw down funds early in anticipation of a potential tax raid on their pensions.

The Chancellor is instead understood to be planning to strip back tax breaks offered to staff and employers that pay money into workplace pensions in a move that could cost the average worker £210 a year.

Ms Reeves is preparing to target the National Insurance (NI) relief by restricting the maximum amount that can be put into a pot tax-free.

The raid will be targeted at so-called “salary sacrifice” schemes, which allow workers to put money into their retirement pots before it is subject to any income tax or NI.

Companies benefit from lower employer NI contributions when staff take advantage of these schemes because the tax is only levied on pay left over after pension contributions.

The Government is also understood to be planning a 2p increase to income tax mitigated by a 2p cut to NI on earnings between £12,571 and £50,270. It would mean workers who are basic-rate taxpayers would see no impact on their take-home pay.

westv

It tells us what we all knew anyway. It was never going to happen.

Marcon

westv said:

It tells us what we all knew anyway. It was never going to happen.

You mean apart from all those who have rushed to withdraw huge amounts of tax free cash in case...?

dunstonh

It was reported in the Times last Friday.   It took the other outlets longer.  Possibly to allow them to scaremonger more.... oh, cynical me...

michaels

Yes - but having floated the idea we can all be happy that we are 'only' seeing a 2% tax rise on all pension drawdown above the TFLS - phew....

Cobbler_tone

No doubt more lucrative to take the extra NI on the way in. More bad news for employers and employees in that position.
With the increase in IC it may make more take tax free cash that weren’t planning to but will take some number crunching and could be more a case of the tax tail wagging the dog again. It is going to extremely difficult not to be net ‘worse off’ from today.
When I looked at my planned £27,500 DB it’s worth about £25 a month down but that was probably taking around 30% of the available tax free portion.

westv

Marcon said:

westv said:

It tells us what we all knew anyway. It was never going to happen.

You mean apart from all those who have rushed to withdraw huge amounts of tax free cash in case...?

I was exluding idiots.

michaels

westv said:

Marcon said:

westv said:

It tells us what we all knew anyway. It was never going to happen.

You mean apart from all those who have rushed to withdraw huge amounts of tax free cash in case...?

I was excluding idiots.

Idiots who thought taking money now and paying a small amount of tax on interest whilst drip feeding it into an ISA was a small price worth paying to protect against the risk of paying 30% or 40% on 156k - there are certainly idiots....