Changes to Annual Allowance and Lifetime Allowance tax controls

Posted by: Pension team on 22 March 2023 11:31

In the Spring 2023 budget, the Chancellor announced changes to both the Annual Allowance and Lifetime Allowance tax controls. These changes were as follows:-

  • The Pension Input Amount (the amount your pension can grow each year) has been increased from £40,000 to £60,000.
  • The Lifetime Allowance of £1,073,000, which was the amount of pension you could build up before a tax charge applied, will be removed and there will be no tax charges with effect from 6 April 2023.
  • Increase the income level for the tapered Annual Allowance to apply from £240,000 to £260,000.
  • Limit the maximum an individual can claim as a lump sum to 25% of the current Lifetime Allowance (£268,275), except where protections apply.
  • Change the taxation of the Lifetime Allowance excess lump sum where they are currently subject to a 55% tax charge above the LTA, to taxation at an individual's marginal rate.
Last modified: 03 August 2023 10:38