Following on the Chancellor’s Autumn Statement, we had the Spring Budget on 15th March. Much of what was outlined in the Autumn Statement will be implemented and details of this can be found here Autumn Statement 2022
However, there were some headline changes that are coming, in particular around pensions, which left us a bit opened mouthed when we were watching it.
The Lifetime Allowance (LTA) is being abolished. The change means you will now be able to hold an unlimited amount within a pension without a LTA tax charge.
Those with LTA protections could potentially start to contribute to pensions again after 6th April 2023, without fear of revoking their protection. Also those with historic LTA protections could still have preferential tax free cash allowances they can benefit from.
The annual contribution Allowance will be raised from £40,000 to £60,000 from 6th April 2023. Although worth remembering that those with high incomes can see this allowance reduced and have a “tapered annual allowance”.
The Money Purchase Annual Allowance, which is for people who have taken flexible taxable income from a pension, will be raised from £4,000 to £10,000 from 6th April 2023.
This remains an area that we would strongly recommend you take advice on and naturally as your financial planners we will help you navigate these changes. If you have any friends or family looking for help, please feel free to introduce us, we’d be happy to help.
The government’s Energy Price Guarantee will be held at the current level of £2,500 for a typical household next quarter, rather than rising to £3,000 as previously planned.
30 hours of free childcare for working parents of all children over nine months old to be gradually introduced, starting in April 2024. Naturally this likely to save parents an awful lot on childcare. This will be phased in as follows:
- Now 3yr olds to school age, 30hrs a week
- April 24, 2yr olds, 15hr a week
- Sept 24, 9mths-3yr old, 15hrs a week
- Sept 25, 9mths to school age, 30hrs a week
There are some eligibility requirements to receive all of this, such as both parents earning at least the equivalent of 16 hours a week at the national minimum wage (around £166pw). And the big one, each parent has a taxable income below £100,000 a year. Worth noting that pension contributions can be used to reduce this figure.
If you don’t pass the eligibility requirements, the hours available and when they kick in will be reduced.
I’ve had a lot of experience navigating the childcare system as a father of 2 young children. So should you or any of your family or friends need to have a chat about this, call us on 0117 942 4333.
The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.