Pension tax limits
This measure supports the government’s efforts to encourage inactive individuals to return to work, and it removes incentives to reduce hours or leave the labour market due to pension tax limits. Legislation will be introduced in the Spring Finance Bill 2023 and will have effect from 6 April 2023. This will:
- Increase the Annual Allowance from £40,000 to £60,000.
- Increase the Money Purchase Annual Allowance from £4,000 to £10,000.
- Increase the income level for the tapered Annual Allowance from £240,000 to £260,000.
- Ensure that nobody will face a Lifetime Allowance charge.
- Limit the maximum an individual can claim as a Pension Commencement Lump Sum to 25% of the current Lifetime Allowance (£268,275), except where previous protections apply.
Legislation will be introduced in a future Finance Bill to abolish the Lifetime Allowance from pensions tax legislation in its entirety
