Pensions

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• Lifetime Allowance – this is the total amount you can currently build up in all your pension savings without incurring a tax charge. The charge that applies to crystallisations of pensions over the lifetime allowance is currently 55%, if the excess is taken as a lump sum. The charge will be removed from 6th April 2023. The lifetime allowance will be abolished completely from April 2024, with the legislation being in a future Finance Bill.

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• Maximum Pension Commencement Lump Sum (tax free cash) – the maximum entitlement, for those without protection, will stay at 25% of the fund value up to a maximum of £268,275 (25% of the lifetime allowance for the 2022/23 tax year). This will be frozen thereafter.

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• Annual Allowance – this is the maximum amount of pension savings you can make each year with tax relief without incurring a tax charge. It’s been boosted from £40,000 to £60,000 from 6th April 2023, the first increase since 2014. Carry forward of unused Annual Allowance from the three previous tax years will still be available.

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• Money Purchase Annual Allowance - this is the annual amount you can contribute to Defined Contribution pensions after having previously accessed a pension flexibly. It’s been increased from £4,000 to £10,000 from 6th April 2023.

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• Tapered Annual Allowance – this reduces the amount of tax relief high earners can claim on their pension savings by reducing the Annual Allowance. The minimum tapered Annual Allowance has been increased from £4,000 to £10,000 from 6th April 2023. The adjusted income threshold at which the allowance taper takes effect will also increase from £240,000 to £260,000 from the same date.