Pension pots set for Budget boost with increase on tax-free limit

Jeremy Hunt is expected to increase the amount workers can put in their pension savings before being taxed – but not everyone will be toasting the announcement with bubbly.

The chancellor is reportedly looking at increasing the lifetime allowance (LTA) on tax-free pensions in today’s Budget as part of a bid to encourage older workers back into the jobs market.

However, he is also poised to make the ‘biggest wine tax raid in 50 years’ – alongside an inflation-linked rise in alcohol duty from August 1 – which could see the price of a bottle rising by 45p.

Under a new system for taxing alcohol by strength, around 90 per cent of still wines will see a rise in the amount they are taxed, The Telegraph reports.

Critics warned the move would deal a ‘crippling blow’ to the industry and consumers.

Meanwhile, the level at which Mr Hunt will set the LTA – currently £1.07million – could rise to £1.8million, with experts saying it is in need of reform.

But former pensions minister Baroness Ros Altmann said his move would not solve the health issues keeping over-50s away from work.

Mr Hunt kicked off the day by announcing a U-turn on the planned cut to energy bills support.

The energy price guarantee will be extended for a further three months from April to June at its current level, the Treasury said.

This means average annual household bills will be capped at £2,500, relieving some pressure in the cost of living crisis.

Rishi Sunak stressed the support will remain in place until the summer when ‘gas prices are expected to fall’.

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