27 Mar 2023
Lumin Wealth’s Managing Director Martin Cotter explains what the Spring Budget tax changes mean for your pension.
The Chancellor is certainly keeping the Lumin team on its toes. Our Financial Planning team has been fielding a number of queries from clients in light of some significant changes to pension taxation in last week’s Spring Budget.
But what are these tax changes, and how can you take advantage of the new rules to boost your pension assets?
Lifetime allowance abolished
It’s fair to say the Chancellor delivered a curveball with his decision to abolish the lifetime allowance (LTA), the maximum amount that can be saved into pensions without incurring extra tax.
The 25% or 55% tax charge on amounts exceeding the threshold of £1,073,100 will be removed from 6 April 2023. This is great news for savers with large pensions who can continue, or resume, payments into their pension pot – and benefit from tax relief on their contributions – without the risk of exceeding the LTA on certain occasions, such as when drawing pension benefits, or at age 75.
Tip: We’re delighted to offer St Albans Times readers a chance to optimise their pensions with Lumin’s Financial Health Check. The review is quick, simple and complimentary, starting with a few questions over a friendly coffee (or tea).
Paying more into your pension
Another of the headline changes to come out of the Budget will see the standard pension annual allowance rise from £40,000 to £60,000 per year from 6 April 2023. This notable increase provides a valuable incentive for savers to pay more into their pension (where they can afford to do so) and benefit from tax relief on their contributions and a larger pension pot.
Retirement flexibility
The abolishment of the LTA tax charge, as well as the 50% increase to the pension annual allowance, may afford greater flexibility around retirement, and mean that certain savers opt to delay their retirement, in order to provide a valuable boost to their pension.
For many people a pension pot is the foundation on which a happy and fulfilling retirement is built, so it’s important to take advantage of generous tax rules while they last.
To find out more call the Lumin team on 03300 564 446, or get in touch via our contact form to book in your complimentary Financial Health Check.
