Chancellor Jeremy Hunt made some significant changes to pension rules in his 2023 Spring Budget.

He is scrapping the lifetime allowance – the limit on how much someone can generally put aside in pension savings before they have to pay a lifetime allowance charge. The current limit is £1,073,100, but the allowance will be fully abolished from April 2024.

Mr Hunt also extended the annual pension allowance – the most someone can pay into a pension in any given tax year without a penalty. It’s set to go up to £60,000 from £40,000. However, high earners will have their allowance tapered down, depending on how much they earn, to a minimum of £10,000. As always, it’s worth seeking independent tax advice to understand your position.

The maximum, non-protected amount you can take out of your pension tax free when you reach minimum pension age as a one-off lump sum remains 25%, but it will now be capped at £268,275.

The lifting of the lifetime pension allowance could have positive implications for inheritance tax planning.

If you pass away before you draw your pension, under certain conditions it can pass to your dependents without incurring inheritance tax. So the government lifting the limit on how much you can put into your pension without paying additional tax could be an efficient way to pass your money on to your loved ones.

But it’s worth noting that the detail around the legislation needed for these changes is not yet clear and will still be debated within Parliament. 

The main rate of corporation tax will increase to 25% from 19%, as expected, from April this year. But there is some positive news for businesses as well.

The Chancellor announced a new policy of “full expensing” for three years – with a view to making it permanent. It means a business’s expenditure on IT equipment, plant or machinery can be deducted from its taxable profits. 

While pensions were the star of the show of this Budget, there were significant changes in the Autumn Budget last November that are worth remembering. They are:

• The amount of dividends you receive from investments that are tax-free has been halved for the upcoming tax year (2023-24) – down to £1,000 from £2,000 – and will fall further to £500 for the 2024-25 tax year.
• The threshold for paying capital gains tax will more than halve for the 2023-24 tax year – to £6,000 from £12,300, and will drop again to £3,000 the following tax year. Capital gains tax is a tax on the profit you make when you sell or dispose of something that’s increased in value, such as property or stocks.

TAKE A LOOK AT OUR RECENT ARTICLE ON UPCOMING TAX CHANGES

We're here to help, but please be aware that we cannot offer any tax advice. We recommend you contact an independent tax advisor to discuss your personal tax situation.

Any current tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances.