Changes to Annual Allowance and Lifetime Allowance tax controls

In the Spring 2023 budget, the Chancellor announced changes to both the Annual Allowance and Lifetime Allowance tax controls. These changes were as follows:-

• The Pension Input Amount (the amount your pension can grow each year) has been increased from £40,000 to £60,000.
• The Lifetime Allowance of £1,073,000, which was the amount of pension you could build up before a tax charge applied, will be removed and there will be no tax charges with effect from 6 April 2023.
• Increase the income level for the tapered Annual Allowance to apply from £240,000 to £260,000.
• Limit the maximum an individual can claim as a lump sum to 25% of the current Lifetime Allowance (£268,275), except where protections apply.
• Change the taxation of the Lifetime Allowance excess lump sum where they are currently subject to a 55% tax charge above the LTA, to taxation at an individual's marginal rate.

We will provide information further for our members in our 2023 annual newsletter