But reversing the change is way easier said than done, especially now that HMRC has confirmed the scrapping of the LTA in a policy paper published on Wednesday.
Rachel Vahey, of stockbroker AJ Bell, said: “Passing laws to abolish the lifetime allowance altogether makes it far tougher for policymakers to reverse the principles again, as Labour has pledged.”
Sir Steve Webb of LCP, a former pensions minister, has warned that reinstating the LTA is “fraught with difficulty” for a variety of reasons.
For one, bringing back the cap on pension saving risks driving senior doctors to retire just before the election. A key reason for scrapping the LTA was to stop highly paid NHS doctors from retiring early to avoid tax bills.
There is also “a flurry” of savers rushing to attract their pension within the run-up to the election, Sir Steve said.
To stop a flood of staff from retiring early, Labour could still resolve to row back on its promise. In consequence, Steven Cameron, of pensions firm Aegon, said: “Making predictions across the pensions lifetime allowance is incredibly difficult.”
This has left savers with large pension pots facing an enormous amount of uncertainty. Should they profit from today’s generous pension rules, or err on the side of caution in case Labour pulls the rug out from underneath their feet?
Fortunately, even when the cap is reintroduced, savers who’ve made probably the most out of Mr Hunt’s rule change should find a way to guard their pension pot.
Because it was created in 2006, the lifetime allowance has been modified multiple times. In response, HMRC has introduced protections so those over the brand new limit could claim the old, higher limit.
Arguably, you need to still seek to grow your pension as much as possible while the generous tax rules are in place.
Ms Vahey said Wednesday’s confirmation that the LTA might be cut means “those that feared hitting the lifetime allowance can resume contributions and keep constructing their pension pot”.
Tax relief makes saving right into a pension very attractive, as any investment returns made in your fund might be freed from capital gains tax and dividend tax.
In addition to scrapping the LTA, Mr Hunt increased the annual allowance from £40,000 to £60,000 within the last Budget, allowing higher-earners to save lots of large sums into their pension tax-free yearly.
Some savers could also be tempted to crystallise their pension early in case a tax charge is reintroduced, but try to be cautious about drawing your pension unless you actually need to. Crystallising a lump sum, and taking it out of a pension, brings this money into the scope of inheritance tax.
2. Consider selling assets to avoid capital gains tax
An attack on capital gains tax rates may very well be on the cards if Labour gets into power, despite the party’s claims.
Capital gains tax receipts have been skyrocketing as landlords and company owners sell up, hitting a record £18bn in 2022-23. The Conservatives have already dramatically scaled back relief given to sales and payouts that incur capital gains and dividend taxes.
But under a Labour government, the tax take could grow ever greater, accountants fear.
In 2022, the Office of Tax Simplification, a now disbanded quango, called for the rates to be aligned with income tax rates in an effort to close the gap between earned and unearned income.
Currently, basic-rate taxpayers pay 18pc on their profits from the sale of a second home and 10pc for shares while higher-rate taxpayers pay 28pc and 20pc.
Earlier this 12 months, shadow chancellor Rachel Reeves said Labour had no plans to extend capital gains tax. But tax experts have said for years that a future government may find it too difficult to withstand.
Nonetheless, Aysha Marley, of RSM, said: “Ms Reeves may find it difficult to justify such a low rate of tax for wealthier individuals and rumours abound that she would consider lowering and even abolishing business asset disposal relief.”
“Business asset disposal relief” grants business owners a low 10pc rate on the primary £1m of gains realised on the sale of a business.