Industry experts have warned that new amendments to the Finance Bill could create further uncertainty around the lifetime allowance (LTA), with AJ Bell highlighting Labour's new clause as "a strong signal" that it remains committed to reversing the LTA changes.

The Finance Bill, which is currently passing through parliament, includes changes to stop lifetime allowance (LTA) charges from arising, as well as increasing the annual allowance, as announced in the March 2023 Budget, with a future Finance Bill to completely abolish the LTA.

However, the Shadow Financial Secretary to the Treasury, James Murray, has added a cause to the most recent amendment paper, which would require the Chancellor to review the impact of the tax-free pension allowance changes and share recommendations from this review with the House of Commons.

In addition to this, the review would be required to make recommendations on the potential alternative approach that would provide equivalent benefits only for NHS doctors.

Following on from the update, industry experts have raised concerns over the continued uncertainty for advisers and their clients who are making decisions on how to take pension benefits in light of this amendment, with previous research from AJ Bell revealing that 72 per cent of advisers expect a future government to re-introduce the LTA in some form.

AJ Bell head of policy development, Rachel Vahey, also highlighted the latest amendment as "a strong signal" that Labour remains committed to its plans to reverse the LTA changes, although she clarified that it is "highly unlikely the proposed amendment will be accepted".

“This feels very much like political posturing," she continued. "But it does strongly signal that Labour objects to the changes, and instead it is putting down a marker in the sand that it believes the pension pain should only be eased for NHS doctors."

“It’s impossible to say today what the future holds and what changes will be introduced in future tax years by the current government, or Labour if they are elected," she added.

"We simply do not know, meaning advisers and their clients have been put in the unenviable situation of being piggy in the middle of a political pensions spat.”

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