Spring Budget 2023 - Pension changes

Posted on 15th March 2023 by Streets Pension


Image to represent Spring Budget 2023 - Pension changes

One of the key measures of the Spring Budget was the announcement that the £40,000 cap on annual pension contributions will be increased by 50% to £60,000 from 6 April 2023. Tax relief for contributions to pension schemes is given at a taxpayer’s marginal rate of Income Tax and is subject to the increased underlying limits. Taxpayers will continue to access carry-forward, unused annual allowances for the last three tax years if they have made pension savings in those years.

The lifetime allowance is the maximum amount of pension and/or lump sum that benefits from tax relief. Although it was expected that the lifetime allowance would increase, the Chancellor made the unexpected announcement that the lifetime allowance of £1,073,100 is being abolished from 6 April 2023. Both of these changes are intended to incentivise older employees to continue in work whilst continuing to build additional pension savings.

The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6 April 2023. Those earning over £260,000 (from 6 April 2023) will begin to see their £60,000 annual allowance tapered. For every complete £2 income exceeds £260,000 the annual allowance is reduced by £1. The annual allowance cannot be reduced to be less than £10,000 (2022-23: £4,000). The Money Purchase Annual Allowance will also increase to £10,000 (2022-23: £4,000) from 6 April 2023.

There will be other incentives to help get over 50’s back to work including expanding the DWP’s “Mid-life MOT” Strategy. This helps people to access financial, health and career guidance ahead of retirement. There will also be a new kind of apprenticeship targeted at the over 50s who want to return to work, called Returnerships.


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


Expert insight and news straight
to your inbox

Related Articles


Pension fund withdrawal options

Most personal pensions set a minimum age at which you can start withdrawing money, typically not before age 55. Some pension benefits can be taken tax-free. Generally, you can withdraw 25% of your pension pot as a tax-free lump sum, with a maximum of


New brooms to deliver better pension frameworks

The Department for Work and Pensions has published an outline of the new Pensions Scheme Bill. There are three main objectives that the government want to achieve, and they are set out below. However, the process of consultation and redrafting that


Tracing lost pension details

An online service is available on GOV.UK at www.gov.uk/find-pension-contact-details to help people find their lost pension funds. You can use this service to find contact details for: your own workplace or personal pension scheme; or someone

You might also be interested in...