Reeves Leaves Pension Tax Cash Limits Unchanged, Leaving Retirees in Limbo
Chancellor Keanu Reeves has left tax-free cash limits untouched in the 2024 Budget, surprising some who took advantage of the allowance last year. This year, he remains tight-lipped about his plans, despite calls for clarity. Meanwhile, pension experts warn of potential risks, and firms report a surge in client enquiries.
Last year, many people rushed to take tax-free cash from their pensions due to fears of a tax raid. However, Reeves left the allowance untouched in the 2024 Budget. This has left some who took the cash feeling they acted prematurely, as Reeves has not adjusted the limit.
This year, Reeves is keeping his intentions regarding tax-free cash limits under wraps. Despite calls to allay concerns, he has not provided any hints about his plans in the upcoming Budget on 26 November. Pension experts advise that taking tax-free cash now may result in missing out on future investment growth under pension tax protection.
Pension firms are experiencing a rush of enquiries from concerned clients, similar to last summer. The tax-free pension income for new retirees in 2024 was up to 16,243 euros annually before taxes applied. However, there is no specific information about taking tax-free pension income between the elections in July and the 2024 budget. The tax rules imply pension income may be taxed progressively over time.
While there are good reasons to take tax-free cash, such as clearing debts or funding important plans, it is an irreversible decision according to HMRC and the Financial Conduct Authority. As Reeves plans to bring pensions into the inheritance tax net from 2027, it's crucial for retirees to stay informed and consider seeking professional advice before making any decisions.
