SIPP Exceeding LTA and the Threat of Labour Victory
Discussion
I have a SIPP that’s well in excess of the old Lifetime Allowance and am about to stop working at the end of June, with the intention to live on savings until April 2025 and then start drawing down my pension.
So with the predicted Labour win on July 4th and the speculation that Labour may reintroduce the LTA what would be the best course of action now? If I started taking my pension before 4th July is it likely to circumvent the reintroduction of the LTA as I assume it won’t be retrospective for those that have already started draw down?
Any other options?
So with the predicted Labour win on July 4th and the speculation that Labour may reintroduce the LTA what would be the best course of action now? If I started taking my pension before 4th July is it likely to circumvent the reintroduction of the LTA as I assume it won’t be retrospective for those that have already started draw down?
Any other options?
The general consensus is that reimposing the LTA may not be as straightforward as many think & may actually not be reintroduced. Reading there does seem to be a suggestion that they are more likely to tinker with the TFLS or annual allowances or tax relief.
If they were to reintroduce the LTA then it is likley as before that they would allow people to protect their current contributions in exchange for not adding anything further.
If they were to reintroduce the LTA then it is likley as before that they would allow people to protect their current contributions in exchange for not adding anything further.
It did go overnight so I think it could come back just as quick. It's not a complex mechanism to re apply . Appreciate this is an opinion , mine is it will be back soon and lower than when it left . Without making a political point it's absolutely a Labour type move .
I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
cliffords said:
It did go overnight so I think it could come back just as quick. It's not a complex mechanism to re apply . Appreciate this is an opinion , mine is it will be back soon and lower than when it left . Without making a political point it's absolutely a Labour type move .
I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
The removal of the tax charge was relatively straightforward.I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
The finance act of 2024 that removed the LTA and replaced it with a new regime ran to 100 pages plus further guidance. Some of it still hasn't been ironed out yet.
Reinstating it will be more complex still.
Labour are punting the idea that the cap will not apply to certain favoured groups, which is not the same as it was before and therefore they can't just roll back to 2020.
Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
Agree that it's difficult to see happening overnight but it is such a relatively easy target that personally I don't wish to take the risk.
Also potentially possible that the 25% tfc will be amended too.
I already had fixed protection of LTA but will be taking out the balance of the 25% now so in effect crystallising the Pension and splitting between my 3 children for their house funds.
Also potentially possible that the 25% tfc will be amended too.
I already had fixed protection of LTA but will be taking out the balance of the 25% now so in effect crystallising the Pension and splitting between my 3 children for their house funds.
Newc said:
Labour are punting the idea that the cap will not apply to certain favoured groups, which is not the same as it was before and therefore they can't just roll back to 2020.
Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
And rightfully so, it is utterly wrong that Doctors / Judges get special treatment whilst other equally hard working people do not, absolutely crackers.Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
cliffords said:
It did go overnight so I think it could come back just as quick. It's not a complex mechanism to re apply . Appreciate this is an opinion , mine is it will be back soon and lower than when it left . Without making a political point it's absolutely a Labour type move .
I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
First announced on 15th March 2023 in the spring budget. This was followed by the Finance (No.2) Act 2023 which put some of these changes into legislation from 6 April 2023.I have made by decisions on the tax free cash element already now and taken the appropriate action. The tax charge at 75 remains in my mind as inevitably. I plan it in my simple projections.
If there were LTA changes, I suspect there would be an introduction of LTA protection, similar to Fixed or Individual Proteciton 2016.
Edited by BenB91 on Tuesday 4th June 11:33
GiantEnemyCrab said:
Newc said:
Labour are punting the idea that the cap will not apply to certain favoured groups, which is not the same as it was before and therefore they can't just roll back to 2020.
Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
And rightfully so, it is utterly wrong that Doctors / Judges get special treatment whilst other equally hard working people do not, absolutely crackers.Once that idea takes root then every other special interest will come out of the woodwork - exemption for doctors? Why not police? Or military? Or MPs? Or Lords? Or judges? You get the idea.
And inevitably a group that doesn't get an exemption will go to court on some 'equal treatment for all citizens' basis, slowing things down even more.
I asked our IFA about this at our last review. His advice was that it's not worth doing anything now, to avoid something unknown in future.
He also confirmed that the limit would be harder to re-introduce than it was to remove, and in his opinion, Labour would more likely peg the existing tax-free cap at £268,275 so the percentage you can take tax-free just reduces over time with the fiscal drag effect.
cliffords said:
Max tax free is still that amount it did not change when they withheld the lta allowance.
I know. My IFA's point was that Labour could very easily just avoid ever raising this threshold in line with inflation, no legislation needed, and an easy way to say they are targetting "wealthy pensioners".CheesecakeRunner said:
cliffords said:
Just listening to rerun of Rachel Reeves this morning on Radio 4 I think, saying that a Labour government had no plans of increasing taxes or national insurance for "working people" perhaps this is insight into what they might do for pensioners
Not sure they class “working people” as the ones having million pound plus pension pots. Gassing Station | Finance | Top of Page | What's New | My Stuff