Spring Budget 2023- Changes To Pension Savings
Changes to pension savings
The Spring Budget brought significant changes to pension legislation with effect from the 6th April 2023. The good news is there’s now an increased opportunity in the amount you can contribute towards pension and the amount you can tax efficiently accumulate in your pension plan over your lifetime. These opportunities will simplify and assist the building up of pension wealth for many individuals.
The Lifetime Allowance
There is now no ceiling on the amount you can accrue in pension savings and still receive the full tax benefits of a pension. The previous lifetime allowance maximum was £1,073,100.00 but this will be removed from the 6th April 2023 and be abolished via a future Finance Bill from the 2024/25 tax year.
The level of the tax-free cash you can withdraw from your pension savings has now been capped. The maximum is frozen at £268,275.00 or 25% of your accumulated pension fund, whichever is lower.
The Annual Allowance
The previous annual allowance of maximum tax-relievable pension contributions in a tax year was £40,000.00. This has now been increased to £60,000.00 per year – a £20,000.00 yearly increase is a significant enhancement for pension saving opportunities for individuals and companies.
What this means for your pension saving plan
The increased contributions levels and removal of the lifetime allowance (LTA) makes pension planning even more attractive for everyone, but particularly for those individuals that were potentially going to be impacted by LTA.
For companies and individuals who can afford to do so, these budget changes make it easier to boost savings and save tax.
Overall, these pension changes are a benefit for all parties concerned. Pension savings are now much simpler, easier to operate and transparent. As always, you need to take specific advice about your situation, but the changes are positive.
Give us a call if you’d like personalised advice about your pension savings. We’re always here to help make the money you work for, work for you.
Book your free initial consultation: call us on 0141 632 2406 now