with Reeves preparing<\/a> her second Budget, those same fears are resurfacing.<\/p>\nA financial planner at Evelyn Partners, who did not wish to be named, told The i Paper: \u201cPersonally, I have seen most clients ask the question. It\u2019s a similar story to last Budget when the same rumours were floating about. I dare say this time it\u2019s more likely, given the worsening economic outlook and less taxation levers to pull.\u201d<\/p>\n
Advisers say the uptick in enquiries is not driven by Budget speculation alone but a confirmed policy change, announced last year, that will bring pensions into the scope of inheritance tax (IHT) from April 2027.<\/p>\n
That means any unused pension left after death could be taxed at 40 per cent as part of someone\u2019s estate, a significant shift that is already prompting changes in financial planning.<\/p>\n
Whatever happens in October, experts are warning against knee-jerk reactions.<\/p>\n
Some of the sharpest changes are being seen among the wealthiest clients, those who had no plans to touch their pensions before the IHT rules were changed.<\/p>\n
They continued \u201cPreviously, when estate planning, there was little point in wealthy people withdrawing PCLS into their IHT taxable estate, when pensions were IHT free until age 75 anyway.<\/p>\n
\u201cThis is perhaps the single biggest increase as these clients were never going to touch their pension, and now with IHT on the horizon, they are looking to take the tax-free cash and either spend it and enjoy themselves or give it away.\u201d<\/p>\n
These clients tend to be withdrawing close to the maximum lump sum allowance of \u00a3268,275, he said.<\/p>\n
The planner added: \u201cSome of these individuals have higher levels of lifetime allowance protection and therefore potentially higher tax-free cash entitlements.\u201d<\/p>\n
Jason Hollands, managing director of Evelyn Partners, said speculation has already led to poor decision-making.<\/p>\n
\u201cThere was much speculation about this last year, which spooked many people into taking their tax-free cash earlier than they might have done otherwise, some of whom will no doubt have since regretted making that move as they ended up bringing cash, they don\u2019t currently need, into a taxable environment.<\/p>\n
\u201cIt is unwise to make such a significant and irreversible decision merely on speculation.\u201d<\/p>\n
Others echoed the warning, with Jason Graham, wealth planner at Succession Wealth, adding: \u201cThere\u2019s definitely been a rise in conversations.<\/p>\n
\u201cUnfortunately, we\u2019re seeing fear and speculation take over, with clients making decisions just in case. But as I often say, we mustn\u2019t let the tax tail wag the dog.\u201d<\/p>\n
Tom Selby, director of public policy at AJ Bell, called for urgent action from the Government to end the uncertainty.<\/p>\n
He said: \u201cWe saw before the last Budget the damage speculation about tax-free cash does and given the fiscal situation, it is inevitable this will happen again.<\/p>\n
\u201cThat\u2019s why we\u2019ve been pushing for a pensions tax lock \u2013 a commitment not to alter tax relief or tax-free cash entitlements, at least for the rest of this Parliament \u2013 to give long-term savers certainty so they can plan for their future.\u201d<\/p>\n
A Treasury spokesperson said: \u201cWe are committed to helping our pensioners live their lives with dignity and respect, which is why in April the basic and new state pension increased by 4.1 per cent.<\/p>\n
\u201cPensioners will receive a boost of up to \u00a3470 to their income in 2025\/26. \u201cOur commitment to the triple lock means millions will see their pension rise by up to \u00a31,900 this parliament.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Last year, many made financial decisions they later regretted over fears the lump sum would be cut Financial…\n","protected":false},"author":2,"featured_media":271820,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[1194,51,474,617,2499,619,16,15],"class_list":{"0":"post-271819","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-budget","9":"tag-business","10":"tag-finance","11":"tag-pensions","12":"tag-personal-finance","13":"tag-rachel-reeves","14":"tag-uk","15":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114873823648297204","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/271819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=271819"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/271819\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/271820"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=271819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=271819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=271819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}