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The Labour party has said it would reverse the abolition of the lifetime allowance if it came to power. Labour is reportedly looking to force a vote on the tax cut when the Budget is debated in the House of Commons.
On Wednesday, chancellor Jeremey Hunt said the lifetime allowance would be abolished, following speculation that it might be raised from the current level of £1,073,100.
In its response to the Budget, Labour has focussed on the pensions tax measure, vowing to reverse the measure if it comes into government. It has said it plans to force a vote on the lifetime allowance in the House of Commons next week.
Shadow chancellor Rachel Reeves, speaking to Robert Peston on ITV on Wednesday, suggested that doctors’ pensions problems could be better resolved by introducing a tax-unregistered pension scheme such as that for judges.
Most savers will never reach the lifetime allowance limit, but it can trigger a heavy tax charge for high earners with large pension accrual like senior doctors. The resulting early retirements and reductions in hours by doctors in recent years have worsened the already heavy strain on the NHS following the pandemic.
However, the government plans to abolish the lifetime allowance for everyone, not just doctors, in practice giving a tax break to the wealthiest. Those less able to save large sums are not seeing any change, meanwhile, as Hunt did not announce reforms to auto-enrolment which would benefit lower earners. He also remained silent on a planned increase in state pension age, which would affect those most reliant on the state pension the most.