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Spring Budget 2023 Pension Changes

Chancellor Jeremy Hunt delivered his 2023 Spring Budget on Tuesday 15th March. Along with changes to childcare and energy, there was also an interesting pension tax revision. In a bid to encourage older people to remain in or return to work, the Chancellor announced plans to abolish the pension Lifetime Allowance.

    The Pension Lifetime Allowance

    The Pension Lifetime Allowance is the amount of money you can save tax-free into your pension throughout your life without incurring a large tax bill. In 2022-23 the Lifetime Allowance remained at £1.073m – a figure that was due to be frozen until 2026.

    Spring Budget 2023 Announcement

    During the Spring Budget, the Chancellor revealed that the Lifetime Allowance will be removed from 6th April 2023, and will be scrapped altogether in future finance bills.

    He also increased the Pensions Annual Allowance – the amount you can save into your pension in a single year while still receiving the tax benefits. This has risen from £40,000 to £60,000 per year in 2023-24.

    Additionally, the Money Purchase Annual Allowance will be increased from £4,000 to £10,000 from 6 April 2023. This directly affects people who have decided to withdraw income as well as any tax-free cash from their pensions and still wish to make additional pension contributions in the future.

    Finally, Chancellor Hunt confirmed that the maximum pension commencement lump sum – most often referred to as “tax-free cash” – will remain at £268,275 and will be frozen at this amount.

    Expert Pensions Advice

    If you’re looking for expert pensions advice we’re here to help. Call our friendly team for impartial advice on 01926 405 883.

    * all information is correct at the time of writing

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