Spring Budget 2023: Individuals
There were no significant changes in the Chancellor’s Budget for Private Clients. It will be a relief to most that yet again no changes to capital gains tax or inheritance tax were announced. Support around childcare, disability benefits and pensions were welcomed and are aimed at encouraging some of the ‘economically inactive’ back in to work to boost the economy.
To discuss what this means for you and your business get in touch or speak to your usual Crowe contact.
Changes to pension contributions and allowances
The anticipated changes to pension contributions and allowances were announced this afternoon, albeit some of the underlying detail remains complex.
The headlines of an increased annual allowance for pension contributions from £40,000 to £60,000 gross from 6 April appears to specifically target senior doctors and GPs in a bid to discourage them from taking early retirement.
However, the taper for high earners remains, albeit with adjusted limits to the extent that those individuals earning in excess of £360,000 will have their tax relievable contributions restricted to just £10,000 from 2023/2024, which still appears inequitable.
The complete abolition of the lifetime allowance came as surprise given that speculation had focused on raising the limit to £1,800,000. This will benefit a small number of individuals and, in turn, their families.
However, the maximum amount of tax-free cash which can be withdrawn from pension funds is still referenced by the current lifetime allowance and will be retained at the current level of £268,275 (25% of £1,073,000), frozen thereafter.
There is undoubtedly a missed opportunity here to redress the imbalance between private pension provision and Defined Benefit schemes and one wonders whether the abolition of the lifetime allowance is a pre-cursor to future changes to the inheritance tax rules surrounding pensions.
Related content: Private sector Trust-based occupational pension schemes.
