News

After a series of relatively quiet Budgets in terms of changes to pension legislation, the Chancellor today decided to make significant changes to the retirement planning landscape.

The aim was to encourage more people to remain in work and discourage early retirement.

Pensions

The amount that can be saved tax efficiently into a pension throughout a working lifetime had previously been capped at £1,073,000, this is known as the Lifetime Allowance.

Any monies taken out above this figure were subject to a tax charge of up to 55%.

This charge will be removed from April 2023 and the Lifetime Allowance will be scrapped completely from April 2024.

The maximum amount that can be taken as a tax free lump sum when you start drawing down on your pension, will be capped at £268,275 (25% of current lifetime allowance of £1,073,100) regardless of the value of the pension pot at the time of retirement.

Further changes were announced to the pensions annual allowance with the contribution limit increased from £40,000 to £60,000 and for those already taking, or having previously taken retirement income benefits, the Money Purchase Allowance will increase from £4,000 to £10,000.

State Pensions

The Governments promise to reinstate the ‘Triple Lock’ used to uprate the State Pension comes into force from April 2023. Therefore the level of basic and new State Pension will rise in line with the Consumer Price Index from £141.85 per week to £156.20 per week and £185.15 per week to £203.85 per week respectively.

The new State Pension system is based on how many ‘qualifying National Insurance’ years you have, with many people needing a full 35 years. However, if you have any gaps in your contribution record, or missing years between 2006 to 2016, the opportunity to purchase additional NI credits ends on the 31 July 2023.

Investments and Individual Savings Accounts

The annual ISA allowance remains at £20,000 per person, the same as it has been since April 2017.

The annual subscription limit for Junior ISAs and Child Trust Funds will remain at £9,000.

David Allen Financial Services can help make your savings, investments and retirement plans work harder for you as well as ensuring you take advantage of all available tax allowances.  We can also help you plan for a home purchase or remortgage via our Mortgage and Protection Advice Team.

For an initial discussion to see how we can help, please contact one of our team on 01228 711881.

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