Spring Budget 2023: For Individuals

During the Spring Budget earlier today, Jeremy Hunt didn’t dish out lots of tax cuts, but focussed heavily on some ‘back to work’ initiatives.  This included taking steps to make it easier for those who wish to work longer after the age of 50 to do so, without risking being penalised for tax reasons.

The policies, designed to incentivise highly skilled individuals (such as NHS clinicians) to remain working for longer include:

• Removing the Lifetime Allowance charge from April 2023, before the Allowance (set at £1,073,100 for 2022/23) is abolished entirely from April 2024.
• Raising the Annual Allowance for pension contributions by 50% from £40,000 to £60,000 from April 2023. Individuals will continue to be able to carry forward unused Annual Allowances from the 3 previous tax years.

The chancellor is hoping that these changes will encourage the more experienced to stay working for longer.

Continuing along the theme of pensions, other points to note from the budget documentation are:

• The increase in the Money Purchase Annual Allowance from £4,000 to £10,000 from 6 April 2023.
• The increase in the Tapered Annual Allowance (TAA) for the highest earners from £4,000 to £10,000 from 6 April 2023.
• An increase in the ‘adjusted income threshold’ for the TAA, which will go up from £240,000 to £260,000 as of 6 April 2023.

For individuals, the Spring Budget documentation confirms some frozen savings limits and reliefs, as follows:

• The starting rate for savings will be frozen at £5,000, enabling individuals with less than £17,570 in employment/pension income to receive up to £5,000 of savings income free of tax.
• The annual subscription limits for Junior Individual Savings Accounts (ISA) will remain at £9,000, with the adult ISA limit frozen at £20,000.

The chancellor also increased the amount of universal credit parents can claim for childcare and provided more free childcare hours for younger children, which he is hoping will encourage more parents to go ‘back to work’.

Please take the time to read our summary of the changes announced and their impact via the link below:

Spring Budget Summary: 2023

For advice and guidance contact your local Whitings Office.

Disclaimer - All information in this post was correct at time of writing.