Spring-ing into the New Budget

Jeremy Hunt has just delivered his Spring Budget and whilst there were no real surprises (thanks to the ever leaky Westminster gossip tap) he did somewhat blow us away with a real change to pension legislation, which could affect you in a positive way.

Let’s have a look at the main changes he has made.


As you may know, the Lifetime Allowance is a ceiling on pension savings, after which, there is a tax charge. The current limit is £1,073,100. However, from the 6th April no one will suffer a Lifetime Allowance charge and from April 2024, it will be abolished.

Lifetime Allowance tests are done when income is taken from a pension, and/or when you reach 75. So thus far, it has been inescapable for those with larger pension funds. The complete removal of this limit means that those tests and subsequent tax charges will fall away and you will pay only your marginal rate of tax on income/lump sums.

This can be a huge boost to your pension fund over the long term as we no longer need to account for that tax charge, and your pension fund can grow in peace. It also means if you were limiting your pension funding due to being close to that limit, we can revisit that strategy.

One thing that hasn’t changed though is the availability of tax-free cash – which is currently limited to a maximum 25% of the LTA itself (or 25% of your pension fund value if lower) and this will not change. So, the maximum tax-free cash you can take will remain at £268,275.


The Annual Allowance is the maximum you are able to contribute to pensions in any one tax year and still receive tax relief.

This is currently limited to £40,000 pa and the Budget has increased this to £60,000 pa. This is a useful increase and we will build that into the planning that we do with you throughout the year, where appropriate.

Thankfully, there is no change to the Carry Forward facility which allows you to look back 3 tax years to mop up any unused tax relief.


Many of you have been affected by the Tapered Annual allowance – this is where high earners have their annual allowance reduced to a minimum of £4,000 pa. This has been increased to £10,000 pa and the adjusted income used to calculate the taper has also increased from £240,000 pa to £260,000 pa. This affords some of you some extra pension funding opportunities which we will discuss with you.


The Money Purchase Annual Allowance is triggered when you take income from your pension (not tax-free cash) and means you can only then contribute £4,000 pa thereafter. This has been increased to £10,000 pa. Again, another opportunity to fund your pension.

Whilst the basis behind these changes was to address the current issues with the NHS pension scheme, the by-product will mean a great boost to larger pension funds over the long term, and more funding opportunities for you. Having said that, the Opposition have already said that they will reverse the removal of the LTA if they win the next Election – things move quickly and so it’s more important than ever to take good advice around your planning opportunities, and that’s where we will help. As always, we will discuss with you personally if we believe you are directly affected but please do get in touch with any questions.


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