Spring Budget 2023 – Key Points at a Glance

After presenting a Budget-in-all-but name with the Autumn Statement, the Spring Budget was delivered against the backdrop of a day of widespread industrial action. While acknowledging the Prime Minister’s two objectives of halving inflation and reducing debt, Mr Hunt focused his Spring Budget on the Prime Minister’s third objective – getting the economy going.

As ever, the run-up saw a flurry of leaks highlighting a focus on childcare at one end of the scale and pensions at the other. That said, we do not think anyone saw the scale of the pensions changes coming, which will impact many of our Clients and their families.

In a wide-ranging and longer than usual speech, there were some key headline items outlined below.

• The inflation rate is forecast by the Office for Budget Responsibility to fall from 10.1% (January 2023) to just 2.9% by the end of 2023
• The Annual Allowance will increase from £40,000 to £60,000 from 6 April 2023. Individuals will continue to be able to carry forward unused Annual Allowances from the 3 previous tax years
• The Money Purchase Annual Allowance will increase from £4,000 to £10,000 and the minimum Tapered Annual Allowance from £4,000 to £10,000 from 6 April 2023
• The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6 April 2023
• The Pension Commencement Lump Sum (Tax Free Cash) for those without protections will be retained at its current level of £268,275 and will be frozen thereafter
• The Lifetime Allowance charge will be removed from April 2023 before the Allowance is abolished entirely from April 2024
• The energy price guarantee is maintained at the current £2,500 level until the end of June 2023

As ever, we are currently working through the fine print and permutations for you of the budget, particularly around pensions planning. If you have any questions about what you should do next, please contact your financial planner.

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Source: TaxBriefs