Plan NOW to avoid the great 2022 pensions tax raid – ‘Sunak to attack savings by stealth’ | Personal Finance | Finance

The British hold billions of pensions, making it a tempting target for the cash-strapped Treasury. In March, Sunak targeted that wealth by freezing the lifetime pension benefit for five years and experts warn there could be more stealth taxes coming in its next budget.

Rumors are rife that Sunak may be looking to increase our pension income in March.

Shaun Robson, Wealth Planning Manager at Killik & Co, is just one of many tax experts warning that our personal and professional pensions could come under sustained attack in 2022.

He says another stealth tax raid on pensions “would impact their status as one of the most tax-efficient savings vehicles” and hit the country’s pension plans.

For years, rumors have circulated that the Treasury will cut tax breaks for pensions, which cost the government £ 41.3 billion in fiscal year 2019/20.

Sunak could be the chancellor who will ultimately reduce this.

The tax break means that each contribution of £ 100 only costs a base rate taxpayer £ 80 and a higher rate taxpayer only £ 60.

It is designed to encourage people to save because it is actually free government money. Cutting pension tax breaks would be massively unpopular, but there is a way for Sunak to sell them to the nation.

He could claim he is doing it as part of the government’s upgrade program, aimed at helping the poorest Britons catch up with the better off.

The pension tax relief is paid 20 percent to taxpayers at the base rate, but this increases the relief by 40 or 45 percent for the better-off.

Sunak could sync it 25 percent for EVERYBODY. This will benefit the lowest paid, but the highest incomes will lose.

So don’t take today’s pension tax relief for granted. If you are affected, maximize your contributions now, before any changes.

READ MORE: The average retirement pot is £ 61,897 – so what will the retirement income be …

The great 2022 pension tax roundup will not stop there. Each year, Britons can save up to £ 40,000 in their pension funds, known as the annual allowance.

Robson is concerned that this will be reduced and he has issued what could be the most frightening warning of all.

Sunak could again reduce the lifetime pension benefit. The punitive charge swallows up 55% of any retirement savings above the current arbitrary threshold of £ 1,073,100.

It is a tax on the people who did the right thing and saved for their future – and who did it successfully too.

Ten years ago the lifetime allowance stood at £ 1.8million, but successive chancellors have reduced it several times. Yet another cut would hardly surprise.

More than 1.6 million people will already crush the lifetime allowance and incur this 55% tax burden, and their numbers could increase.

For decades, governments have urged us all to save in a pension, supposedly to fund our future spending.

Now that money is being plundered to fund government spending instead.