Rachel Reeves considers cutting tax-free pension lump sum to raise billions
Rachel Reeves’ pension plan that could affect you
- Rachel Reeves is reportedly considering reducing the tax-free pension lump sum to help address a significant shortfall in public finances.
- Currently, pensioners can withdraw a quarter of their pension pot tax-free, capped at £268,000.
- Lowering this cap could raise around £2bn, contributing to filling a projected £50bn black hole in the Treasury's budget.
- Leading economists warn that substantial tax rises or changes to borrowing rules are needed to cover the deficit, with capital gains tax on high-value properties also being considered.
- Despite these fiscal pressures, government borrowing in July was lower than anticipated at £1.1bn, the lowest for three years, driven by increased tax receipts.