What does the 2023 budget mean for you, your finances and your pension?

The 2023 Budget has provided great opportunities for those looking to increase their income during their retirement years. The abolition of the pension’s lifetime allowance, along with the increase in the annual pensions allowance from ￡40,000 to ￡60,000, means people can invest more money in a highly tax efficient environment specifically for their retirement. The increase in the money purchase annual allowance?from ￡4,000 to ￡10,000 per annum also helps those that have already taken pension benefits but now have the ability to pay more into pension, further bolstering their total retirement income.

The planned changes to higher rate and additional income tax will still go ahead from April, this means that hundreds of thousands of higher earners will be looking at a bigger bill. As ever, advice can be provided to reduce the drag on this tax, and now with the increase to pensions, people can make greater provisions for themselves and be rewarded with tax breaks. The decrease in the annual allowance for capital gains tax to ￡6,000 also remains, with urgent action needed for any investors with gains to ensure that they use their allowances before the end of the tax year.

And there is also good news for limited companies. Whilst the Chancellor has confirmed the planned increase in corporation tax to 25 per cent will be going ahead, he also announced a new policy of “full capital expensing” over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits. Mr Hunt also said he will introduce a new tax credit for small and medium-sized firms that spend 40% of their expenditure on research and development. Tax reliefs for film, TV and video gaming will also be extended.

The key as always is to seek financial advice so you are fully aware of all the changes so you can maximise your wealth for you and your loved ones

Want to know what else the 2023 Budget means for you and your pension? Click here to read Morgan Lloyd Pensions 's commentary on the 2023 Budget.

Rob Gilbert

Associate Director

Clifton Asset Management PLC