Spring Budget 2023 – Pension Changes

You may already be aware of the headlines around the most recent Budget, delivered by the UK Chancellor, Jeremy Hunt, on 15 March 2023. At Robertson Baxter we have watched with interest and thought you might appreciate a summary of the changes announced after a few weeks have passed, now that the standard parliamentary process of debating and approving the Finance Bill has been completed.

As is often the case, the pre-budget speculation turned out not to be true and a lot of the changes will be beneficial to clients saving into a pension.

One thing that hasn’t changed is that the jargon still remains! In simple terms, there were some interesting changes to the pension rules and most people can now add more to their pensions every year than they could before. Furthermore, there is no longer a worry about a lifetime limit on the value of a pension incurring an extra tax charge.

In brief the main specific changes to the pension tax rules are:

  • an increase in the Annual Allowance to £60,000 from £40,000
  • the removal of the Lifetime Allowance in 2023/24 onwards
  • an increase in the Money Purchase Annual Allowance to £10,000 from £4,000
  • an increase in the amount of adjusted income at which the pensions taper applies to the Annual Allowance to £260,000 from £240,000.
  • for somebody who has adjusted income of £360,000 or more, they will have a maximum Annual Allowance of £10,000
  • a restriction in the PCLS to £268,275, or 25% of the value of a Defined Contribution Fund, whichever is the lower
  • that people who have previously made an election to secure a higher Lifetime Allowance (under fixed, individual or enhanced protection) will be able to make contributions within their Annual Allowance in 2023/24 without losing the benefits of that protection

If you would like to know more about how these changes may apply to you personally, please speak to your adviser at Robertson Baxter. If you do not have a review meeting booked any time soon, it would be nice to hear from you and you should know by now we love to talk about pensions any time!

In the meantime, we wish you a very Happy Easter and hope you enjoy the lighter, warmer months to come.

Antony, Dan, Gillian and John

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