On 15 March Jeremy Hunt delivered his second major fiscal statement as UK Chancellor, surprising everyone with very significant pension reforms. There were some big announcements for personal and business tax too, fuelled by some encouraging reports about the state of the UK economy, which offered Mr Hunt some room for manoeuvre.
Our recent webinar explored the key areas of the Spring Budget which were likely to impact on personal finance and explained what to be aware of as part of your own tax planning.
With some encouraging predictions from the Office for Budget Responsibility, there was a sense that the UK’s finances have proved more resilient than expected, giving an opportunity for some of those grim reforms announced in November to be tempered with a few conciliations.
In the webinar Peter Webb, our Head of Tax Advisory, unpacked the Budget looking at the background of the Chancellor’s statements, and reviewed some of the key changes and announcements.
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For personal tax, the most notable changes concerned pensions. The Lifetime Allowance, which has acted to offer a real tax advantage to pension savings, will be abolished from next year meaning there will be no ceiling applied to how much you can save for retirement. This is also likely to help simplify any transfers to QROPS if you are transferring your pension overseas. Other important adjustments include the amount which can be taken tax free from a pension; until now a 25% lump sum has been allowed, but this will be capped at £268,275. In addition, the amount you can contribute to your pension tax-free has been boosted from £40,000 to £60,000 – effective from this tax year.
Noted too were a couple of helpful prompts about National Insurance contributions and the need to declare any sale of crypto assets on Tax Returns from 2024. The latter is perhaps being introduced to help the UK tax authorities better understand the impact of this form of investment. The webinar also reviewed some of the other tax changes coming into force this month as part of the announcements made last November, which mean many people will face a higher UK tax bill.
It’s worth bearing in mind that a change of government may affect some of the changes which were announced – for example Labour has already confirmed it would reintroduce the Lifetime Allowance for pensions.
To discuss your tax planning in more detail please contact your nearest office.