Financial Planning Today quotes Harriet Betteridge on rumoured changes to tax-free pension sums ahead of the UK Budget
As the UK Autumn Budget approaches, rumours persist about potential tax changes, with the latest speculation focusing on reducing the tax-free pension commencement lump sum to save the Treasury over £2 billion annually.
Harriet Betteridge, Partner in the Private Client Team has observed that clients are already rethinking their pension planning because of previously-announced tax changes.
With pensions coming into the scope of inheritance tax in April 2027, many of our clients are now considering whether to start withdrawing their tax-free lump sums to gift to children. They are also looking at drawing an income from pensions, with the option of gifting any surplus if it exceeds their needs.
She said it marks a significant shift in approach, given that the prevailing wisdom over the past decade has been to leave pension pots untouched so they could be passed on free of IHT.
She said the concern about the tax-free allowance is not new.
Even before last year’s Autumn Budget, financial advisers were worried that the availability of tax-free cash could be reduced or removed altogether. It would not be surprising if many people choose to access their pension pot cash ahead of the forthcoming Budget.
Read the full piece in Financial Planning Today here.
