Lifetime Allowance Changes
The lifetime allowance was the total amount that could be built up in your pensions without paying a tax charge. However, since 6 April 2023 the tax charge will no longer apply.
The standard lifetime allowance remains at £1,073,100 and will continue to be measured for the meantime. It is set to be removed entirely from 6 April 2024.
Annual Allowance
From 6 April 2023, the annual allowance was increased from £40,000 to £60,000.
This is the maximum amount that someone can contribute to a pension each year while still receiving tax relief (including any contributions from an employer). This increase is good news for people looking to significantly boost their pension pots.
Tapered Annual Allowance Changes
In previous years, your annual allowance would have been reduced by £1 for every £2 of adjusted income over £240,000. If you had an adjusted income of £312,000 or more your annual allowance would have been reduced to £4,000.
From 6 April 2023, your annual allowance will reduce by £1 for every £2 of adjusted income over £260,000. If you have an adjusted income of £360,000 or more your annual allowance will be reduced to only £10,000.
Money Purchase Annual Allowance (MPAA) changes
Since 2017, anyone who had flexibly accessed a pension, could only pay in up to £4,000 to their money purchase pensions each tax year, without it trigging a tax charge.
On 6 April 2023, the MPAA rose to £10,000. This benefits anyone looking to build up their pension further after they’ve accessed it.
You can now pay in up £8,000 and the government will add 20% in pension tax relief on top.
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