Annual allowance increased to £60,000

The chancellor announced that the annual allowance will rise from £40 000 to £60 000. The money purchase annual allowance and the minimum tapered annual allowance (TAA) will both be increased from £4 000 to £10 000 while the adjusted income threshold for the TAA will also be increased from £240 000 to £260 000.

The government has also decided to abolish the lifetime allowance (LTA) charge for 2023-24 with a commitment to ‘deliver the technical changes necessary to abolish the LTA from April 2024 in a future Finance Bill’.

The maximum pension commencement lump sum for those without relevant protections will be retained at its current level of £268 275 and will be frozen thereafter. Lump sums currently taxed for some individuals at 55% above the LTA will be taxed at an individual’s marginal rate of income tax. These changes will take...