5 ways you can act on the new Budget rules
Get today’s Budget changes with 5 suggestions for how they can work for you and your money before tax year ends
Published on 15 Mar 20231 minute read
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Today’s Budget changes are not as straightforward as they may seem at first glance – we break everything down for you here.
Pension changes taking effect on 6 April 2023
|
From |
To |
Lifetime allowance |
Scrapped! |
|
Pensions annual allowance |
£40,000 |
£60,000 |
Money Purchase Annual Allowance – the amount you can pay into your pension after you’ve taken benefits |
£4,000 |
£10,000 |
Adjusted Tapered Annual Allowance threshold |
£240,000 |
£260,000 |
Minimum tapered annual allowance |
£4,000 |
£10,000 |
Tax-free lump sum |
Frozen at £268,275 |
What does the cap and freeze on the tax-free lump sum mean?
The new cap and freeze means that you won't be able to increase the tax-free lump sum above £268,275.
HRMC will explain whether future contributions will impact people who have some form of lifetime allowance protection.
How the scrapped lifetime allowance can boost your pension pot
Let's say you stopped saving into your pension because you took out fixed protection to protect access to your lifetime allowance. You can start contributing to your pension again.
First, you will need to establish if you will lose access to the larger tax-free lump sum.
After that, you could top up your pension by £180,000 next year. You could do this by using the new increased £60,000 annual allowance and mop up your unused allowances for the previous three tax years using pension carry forward.
5 ways you can make the most of your allowances before tax year ends
- Top up your pension to make the most of available tax relief
- Review and sell off straggly investments (also known as crystalising) while the larger capital gains tax allowance is still available
- Move investments held in taxable accounts into an ISA to shelter future returns from tax
- Married couples can transfer assets to the husband, wife or civil partner who has spare allowances or who qualifies for a lower tax bracket
- Higher risk schemes such as Venture Capital Trusts and Enterprise Investment Schemes could be considered after the Government reaffirmed their commitment
Let Bestinvest help you navigate the Budget changes
If you’re keen to find out how today’s Budget changes affect you, we can help. You can book yourself in for a free coaching session with one of our qualified financial planners. We’re here to help you find the fastest path to your investment goals – before tax year ends!
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