Jeremy Hunt’s first full Budget delivered a surprisingly big pensions giveaway, removing the lifetime allowance and increasing the annual allowance, in an attempt to keep older workers (particularly those in the NHS and in Civil Service jobs) in employment, as part of wider plan to grow the economy. The new rules take effect from 6th April 2023.
The current lifetime allowance (ignoring any protections) is £1.07m. The rules state that if your pot is above this when a crystallistion event takes place (i.e. you take benefits), then there will be a charge on the excess of either 25% or 55% – this has effectively now been removed.
On top of this, the annual tax-free allowance – i.e. the maximum amount an individual can contribute to their pension each year – has been increased by 50%, from £40,000 to £60,000.
We expect more detail on these changes in the coming days, however, they will present a good financial planning opportunity for those in a position to take advantage.
Should you wish to discuss these changes, and the opportunities they present in terms of taxation, retirement and inheritance tax planning, please contact us.
Statement issued on 17/03/2023 by:
Nigel Foster, DipPFS