Pensioners who have diligently saved for their retirement are facing a challenging predicament due to higher tax bills from HMRC, as per a pensions expert. With the upcoming Budget, there is an appeal to increase the personal allowance to ease the burden faced by many pensioners.
According to Claire Trott, Divisional Director of Retirement and Holistic Planning at wealth firm St. James’s Place, the current frozen personal allowance of £12,570 is likely to result in more pensioners having to pay additional tax, potentially necessitating a tax return and compounding their financial worries.
Trott further expounded on the intricacies of the tax system, underscoring the necessity for reforms that would facilitate easier future planning for families. A pressing concern she pointed out is the tapering of the personal allowance, which results in individuals earning between £100,000 and £125,140 paying up to 60 percent tax.
Furthermore, Trott emphasized that the High Income Child Benefit charge should be eradicated or simplified, as it can significantly impact families, particularly those returning to work.
Chris Rudden, Head of Investment Consultants UK at Moneyfarm, also highlighted the need for clarity on the implementation of changes related to the pensions lifetime allowance. He stressed that further elucidation is crucial to prevent pension savers from facing more confusion and uncertainty.
Despite these concerns, some analysts are prognosticating that the Chancellor’s forthcoming statement may not address the issue of pensions allowances. Maria Dawson, Head of Payroll and Compliance at Sapphire, indicated that there has been little discussion around potential changes in this area, suggesting that other financial matters may take precedence in the Budget.
As pensioners continue to grapple with escalating tax bills, the call for an increase in the personal allowance stands as a vital plea to alleviate the financial strain faced by those who have rigorously saved for their retirement. With the Budget on the horizon, it remains to be seen how the government will address these concerns.
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