Budget 2023: Pensions rise as Jeremy Hunt drops lifetime allowance

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Jeremy Hunt has removed the lifetime allowance cap on tax-free pension savings - which was £1million - in a boost major for well-to-do Britons.

Labour said the Chancellor's decision to unveil generous retirement benefits in the budget was a tax cut for "the richest 1 per cent".

The Chancellor was expected to increase the Lifetime Retirement Allowance by £1million in a bid to incentivize over-50s to work longer and reverse the trend towards early retirement. But in a surprise announcement, Mr Hunt said the lifetime allowance - dubbed the 'doctors tax' - would be abolished altogether.

The Chancellor said he had 'listened to concerns' of senior NHS doctors who say pension tax charges 'make them leave the NHS'. The Treasury said that would mean 15,000 more people in the workforce by 2028, but could not say how many of those would be doctors. taxes work,” Hunt said. "I have also been asked by some to increase the lifetime allowance...I have decided not to. Instead, I will go further and remove the lifetime allowance altogether."

The Chancellor also announced bigger changes to the annual tax-free allowance for retirement savings The amount each person can save on their pension each year before paying tax will increase from £40,000 to £60 £000.

Mr Hunt said: "As Chancellor I realized the problem goes beyond doctors. No one should be expelled from the labor market for tax reasons.

But Labor leader Sir Keir Starmer said dropping the lifetime allowance "benefits those with the broadest shoulders", arguing it amounts to " a huge gift." for some of the wealthiest" during a cost of living crisis.

Shadow Chancellor Rachel Reeves said: "The rabbit out of Kwasi Kwarteng's hat was a 45p tax rate cut, and [that] chancellor is a tax cut for the top 1% and their pensions. It shows how out of touch the Conservatives are, even though they often hover around the top table. Labor has claimed that the change to the lifetime allowance...