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5 ways you can act on the new Budget rules

Get today’s Budget changes with 5 suggestions for how they can work for you and your money before tax year ends

Published on 15 Mar 20232 minute read

Today’s Budget changes are not as straightforward as they may seem at first glance – we break everything down for you here.

Pension changes taking effect on 6 April 2023

 

From

To

Lifetime allowance

Scrapped!

Pensions annual allowance

£40,000

£60,000

Money Purchase Annual Allowance – the amount you can pay into your pension after you’ve taken benefits

£4,000

£10,000

Adjusted Tapered Annual Allowance threshold

£240,000

£260,000

Minimum tapered annual allowance

£4,000

£10,000

Tax-free lump sum

Frozen at £268,275

What does the cap and freeze on the tax-free lump sum mean?

The new cap and freeze means that you won't be able to increase the tax-free lump sum above £268,275.

HRMC will explain whether future contributions will impact people who have some form of lifetime allowance protection.

How the scrapped lifetime allowance can boost your pension pot

Let's say you stopped saving into your pension because you took out fixed protection to protect access to your lifetime allowance. You can start contributing to your pension again.

First, you will need to establish if you will lose access to the larger tax-free lump sum.

After that, you could top up your pension by £180,000 next year. You could do this by using the new increased £60,000 annual allowance and mop up your unused allowances for the previous three tax years using pension carry forward. 

5 ways you can make the most of your allowances before tax year ends

  1. Top up your pension to make the most of available tax relief
  2. Review and sell off straggly investments (also known as crystalising) while the larger capital gains tax allowance is still available
  3. Move investments held in taxable accounts into an ISA to shelter future returns from tax
  4. Married couples can transfer assets to the husband, wife or civil partner who has spare allowances or who qualifies for a lower tax bracket
  5. Higher risk schemes such as Venture Capital Trusts and Enterprise Investment Schemes could be considered after the Government reaffirmed their commitment

Let Bestinvest help you navigate the Budget changes

If you’re keen to find out how today’s Budget changes affect you, we can help. You can book yourself in for a free coaching session with one of our qualified financial planners. We’re here to help you find the fastest path to your investment goals – before tax year ends!

Book a free coaching session

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