SPRING BUDGET: BOOST FOR PENSION SAVERS
Today has seen Jeremy Hunt present the spring budget - his second statement since becoming chancellor. The spring budget is an opportunity to provide an update on the condition of the UK economy whilst confirming plans for spending & taxes, and there are some BIG changes for pensions!
Abolishment of the Lifetime Allowance
The Lifetime Allowance is currently how much you can build across pensions before becoming subject to a tax charge of up to 55% when taking benefits. It stands at £1.731m, with reductions in recent years resulting in more people being caught by the rule. Today, it has been announced that the Lifetime Allowance has been ABOLISHED in order to simplify the pension tax system and incentivise the UK’s most experienced talent to work for longer.
This limit has effectively penalised people who may have made smart investment choices. The abolishment arrives as Jeremy Hunt now seeks to address concerns that the limit has been driving doctors & other highly experienced professionals into early retirement.
Increase to the Annual Allowance
The Annual Allowance is how much you can save into pensions whilst receiving tax relief each year. Currently standing at the lower of £40,000 or your ‘relevant earnings’, Jeremy Hunt has confirmed an increase of 50% to £60,000, providing savers greater opportunity to benefit from the valuable tax reliefs associated with pension investments.
The increase will be welcomed by those trying to build sustainable pension pots or make up shortfalls ahead of retirement, providing the ability to establish greater retirement security whilst remaining active in work, contributing to the UK’s economic success.
The importance of advice
Pension and retirement planning remains a complex area, so it’s crucial that those looking to review their pensions seek professional financial advice. If you’d like to understand what these changes mean for you, contact us today on:
📞 01384 390039