Budget tax freezes criticised by PIMFA

PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, is deeply concerned by the Chancellor’s Budget announcement to freeze the lifetime allowance for pensioners, as well as the capital gains tax and inheritance tax thresholds until 2026.

Simon Harrington, senior public policy adviser at PIMFA, says:

“We are dumbfounded that the Chancellor has frozen the pension lifetime allowance until 2026. Doing so penalises pension savers looking to secure their future and in the most extreme cases sees people left with no choice but to give up work. Freezing the lifetime allowance could see a number of people inadvertently exceed their allowance and, as we have seen previously with NHS workers, incur a 55 per cent tax hit which they otherwise would not have to pay.

“Freezing both the inheritance tax and capital gains tax also discourages the public from investing in our economy at a time when the Chancellor himself admits we need an investment-led recovery.

“Whilst we strongly believe that there should be focus on repairing public finances, freezing the thresholds for inheritance tax, capital gains tax and the lifetime allowance attacks individual personal finances and aspiration. Covid has shown how fragile the UK’s consumption driven economy can be. We need to become a more resilient and investment driven country. This cannot be achieved without the savers and investors that would be most hit by these changes.”

While the tax freeze mentioned above has been criticised, the Chancellor’s announcements on a stamp duty holiday extension and the launch of a new Help to Buy: mortgage guarantee scheme have been broadly welcomed by the residential property industry.