In the 2023 Spring Budget, the Chancellor announced changes to pension allowances including the abolition of the Lifetime Allowance (LTA) and the raising of the limits for the Annual Allowance (AA). These are designed to alleviate the impact of strict pension rules, which are believed by Mr Hunt to have had a negative impact on the country’s labour market. 

The LTA is a limit on the pension savings that you can build up and take out over your lifetime without paying an additional tax charge. From 6 April 2023, the LTA Tax Charge on pension savings in excess of the LTA was removed.

The AA is a limit on the amount of pension savings that you can build up each tax year while still benefiting from tax relief. Unused allowance from the previous three tax years can also be carried forward.

The Chancellor has announced an increase in the standard AA from £40,000 to £60,000 for the tax year 2023/24. This means you may have the scope to make larger tax-efficient pension savings than before. Please note, for high earners, the AA may be lower.

Our brochure looks at the changes to the LTA and AA and how these may impact you.

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Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.

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