Keir Starmer was accused of "hypocrisy" over a tax perk he was given on his pension from a previous job.
It comes as the Prime Minister plans to impose an inheritance tax on pensions.
Under the current tax arrangements in the UK, pensions are generally not subject to inheritance tax. When someone passes away, their pension can typically be passed on to their beneficiaries without being taxed under inheritance tax rules.
From April 2027, inherited pensions will be subject to taxation, which could push more estates over the £2 million threshold for inheritance tax, affecting the financial planning of those relying on pensions as part of their estate.
Passed-down pensions could be taxed at an effective rate of up to 67 per cent – subject to consultation.
Passed-down pensions could be taxed at an effective rate of up to 67 per cent from April, 2027
PAThe change comes after Starmer was accused of double standards over his tax perk last year.
When Starmer stood down as the Director of Public Prosecutions (DPP) in 2013, he was granted a special pension arrangement known as a "tax-unregistered" pension scheme.
The scheme was established under the Pensions Increase (Pension Scheme for Keir Starmer QC) Regulations 2013, specifically for Sir Keir.
This legislation was introduced through secondary legislation, which means a government minister created it without the need for primary legislation through Parliament.
Previously, there was a lifetime allowance which was the maximum amount you could build up in your pension without incurring an additional tax charge, but this has been abolished from April 2024.
Now, individuals can save more than the previous cap of £1,073,100 into their pensions without triggering a lifetime allowance charge.
However, before this was abolished, Starmer's pension contributions from his time as DPP did not count towards his total pension savings for the purpose of the lifetime allowance, allowing him to save beyond the £1.07million limit without incurring the usual tax penalties.
The Labour Party said at the time that it was standard practice for retiring DPPs to get such a deal.
Starmer said that he had not taken advantage of the tax break and "nor do I want to".
Since the lifetime allowance no longer applies to anyone's pension contributions, Starmer's tax break is now obsolete.
However, Starmer was accused of double standards last year after criticising the previous government's decision to abolish the allowance.
Sir Iain Duncan Smith, a senior Conservative MP, berated Starmer, claiming his stance on pension tax policies was as "close to hypocrisy as it is possible to get".
Before the cap was scrapped, Starmer pledged to ditch the pension perk upon entering Downing Street, adding that the tax break should only be available to NHS doctors in order to ensure they were not disincentivised from continuing to work.
"Whatever changes is needed within legislation or anything else, I am very happy want to be and will be in the same position as everybody else in this country," he said at the time.
However, he had pledged to repeal the law as part of plans to reinstate the allowance, this suggests a U-turn.
The Treasury then revealed there were “no plans” to do so in reply to a written question by Richard Holden, a former Tory chairman.
Ex-Tory Party chairman Richard Holden submitted a written question in Parliament asking for clarification on the issue.
Tabling his question on July 24, Holden wrote: “To ask the Chancellor of the Exchequer, if she will take steps to repeal the Pensions Increase (Pension Scheme for Keir Starmer QC) Regulations 2013.”
In a response penned on July 26, Chief Secretary to the Treasury Darren Jones said: “The 2013 regulations were introduced to ensure the Director of Public Prosecutions' pension scheme is uprated in line with other public service pension schemes.”
The Bristol North West MP added: “There are no plans to repeal the regulations.”
Reacting to the admission that there were no plans for a change in legislation, Holden said: "Sir Keir Starmer has (surprise, surprise) U-turned on his pledge to scrap his own special tax perk."
GB News has approached Downing Street for comment.
HM Treasury spokesperson said: “There are no plans to reintroduce the lifetime allowance.”
