Jeremy Hunt is preparing to raise the tax-free allowance for pensions in tomorrow’s Budget, in what would be a major boost. The Chancellor is expected to boost the cap by more than half a million pounds in an attempt to battle the wave of early retirement that has gripped the UK and squeezed growth in recent years.
The threshold for the maximum amount of money workers can put in their pensions before being taxed – known as the lifetime allowance (LTA) – is expected to see an increase from £1million to more than £1.5million on Wednesday.
The LTA was cut by George Osborne in 2012, but tomorrow’s changes are likely to restore it to levels close to its previous peak of £1.8million.
This comes despite the threshold previously having been frozen at £1million until 2028.
Reductions in the lifetime allowance have contributed to a wave of early retirements, as some highly paid workers have cut their hours or retired early in order to avoid breaching the cap.
Mr Hunt will deliver his Budget to the House of Commons on Wednesday.
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