Sunak’s 55% tax decision could cost pension savers £65,000

Pension saving will be important to millions of people, but there are certain restrictions to bear in mind. One of these is the Lifetime Allowance (LTA), which limits how much a person can save across their lifetime while still benefiting from tax relief.Exceeding the LTA means Britons could be subject to a hefty 55 percent tax which many will want to avoid. Currently, the Lifetime Allowance cap stands at £1,073,100, which although may seem a lot, has been frozen.The decision to freeze the Lifetime Allowance until 2025/26 was taken by Rishi Sunak during his time as Chancellor. However, it means more people will be brought into the tax net over time as inflation propels them over the limit.READ MORE: Barclays issues warning after man targeted in cruel online scam Pension Lifetime Allowance freeze could cost savers £65,000 (Image: Getty)Now, experts are suggesting Mr Sunak, in his new role as Prime Minister, could oversee the freeze being extended for even longer.All eyes are now on the Autumn Statement where it has been predicted the Lifetime Allowance freeze could be extended to 2027/28.Tom Selby, head of retirement policy at AJ Bell, said: ‘The Lifetime Allowance has been the subject of repeated attacks by successive Governments since hitting the high watermark of £1.8million more than a decade ago.’The level was steadily eroded away from that point until 2017/18, when at £1 million a Consumer Prices Index (CPI) inflation link was introduced. That only lasted until 2020/21, however, after which Rishi Sunak – then the Chancellor of the Exchequer – froze the lifetime allowance.DON’T MISSState pension triple lock is Sunak’s ‘hot potato’ [INSIGHT]Money saving tips which could reduce your energy bill this winter [ANALYSIS]’Living’ state pension could create ‘adequate income’ for pensioners [EXCLUSIVE] Rishi Sunak and Jeremy Hunt’s announcement is expected imminently (Image: Getty)’This is a very decent standard of living but hardly a king’s ransom. ‘What’s more, by freezing the Lifetime Allowance, the amount £35,000 a year can buy someone will be eaten away by inflation.’It is expected the Autumn Statement will be dominated by the idea of ‘fiscal drag’, with inflation and earnings growth pushing more people into higher tax brackets.If thresholds are held or reduced, it could mean millions more are subject to increased taxation.Chancellor Jeremy Hunt gestured towards this idea when he told Sky News this weekend: ‘We’re all going to be paying more tax, I’m afraid.’