01/04/2023

 

The pension savings you can make tax-free in each tax year (the year beginning 6 April) to all pension arrangements combined are limited to the Annual Allowance (AA).  The Chancellor announced in his March 2023 budget that the AA for 2023/24 will rise to £60,000.   A reduced AA potentially applies if you have taxable income above a certain threshold.  Also, if you access a DC pension pot flexibly, there is a lower annual limit on the amount of contributions that you can subsequently pay with tax relief into another DC arrangement. This lower annual limit for 2023/24 is £10,000.

The value of the pension savings you can make tax-free over your lifetime are limited to the lifetime allowance (LTA), which for 2022/23 was £1,073,100.  However, the Chancellor announced in his March 2023 Budget that this limit will be abolished with effect from 2024/25.  Also, in 2023/24, the LTA tax charge where benefits exceed the lifetime allowance will be reduced to nil (ie it will have no effect). 

The current stance of the Labour Party is that they would reintroduce the LTA if they get into power at the next general election.  Depending on your views, you might therefore wish to seek independent financial advice if you believe your pension savings are worth more than £1,073,100.