Budget 2023: Tax-free pension limits raised - here's what it means for your savings

Pensions_matter_2

Just in case missed, the freeze on the tax free cash lump sum is just part of the picture. HMRC have issued a policy document ‘Pension Tax Limits’ which sets out changes affecting other types of lump sum payment too, including certain lump sum death benefits, these being defined by reference to the LTA. (Not sure if Im allowed to paste a link here under forum rules!).

Albermarle

zagfles said:

Pat38493 said:

PensionSaverPeter said:

I wonder what will happen if Labour get in and do re-implement the LTA cap?  Would they set it back to £1,073,100 or perhaps higher?

Will those that have since paid in to their pension to take them above the re-implemented cap be given some protection on that amount so they don't again get hit with the punitive tax charges.  It seems a bit disingenuous to hit them when they've have topped up in good faith they they wouldn't get hit with the massive taxes.

I've just listened to an interview with the shadow chancellor where she seemed to imply that they would re-instate the LTA at the current level, and give "doctors" the same exception that judges have today (she was not pressed to further define what she meant by doctors).

Judges use an unregistered scheme. How are they going to do that retrospectively for doctors? It doesn't sound like they've thought it through, in fact how could they, it's only 2 days since the budget. It's knee-jerk political point scoring, not carefully considered policy. There's probably not going to be an election for 18 months, so I wouldn't worry about it yet, wait until the BMA and hopefully some of the few independant and financially aware journalists press them for exact details of their proposals.

I agree that it is probably not worth doing anything yet, or even thinking it about it too hard ( and getting a headache) . 

Chancellor springs totally unexpected policy in budget. Said Chancellor is perfectly aware what the Labour reaction will be.
Labour, whether it wants to or not, is forced to react immediately, at what seems an open goal ( like the 45% tax cut last year) without time to think any implications through.

Result - uncertainty for those with bigger pension pots for coming years(s) and the Chancellor must have been perfectly aware that this would happen before springing this surprise on everybody. So this uncertainty can be as much blamed on him, as it can on the Opposition.

Hopefully things will become clearer when the dust settles.

kinger101

Pat38493 said:

PensionSaverPeter said:

I wonder what will happen if Labour get in and do re-implement the LTA cap?  Would they set it back to £1,073,100 or perhaps higher?

Will those that have since paid in to their pension to take them above the re-implemented cap be given some protection on that amount so they don't again get hit with the punitive tax charges.  It seems a bit disingenuous to hit them when they've have topped up in good faith they they wouldn't get hit with the massive taxes.

I've just listened to an interview with the shadow chancellor where she seemed to imply that they would re-instate the LTA at the current level, and give "doctors" the same exception that judges have today (she was not pressed to further define what she meant by doctors).

Well, I hope it doesn't include Neil Fox or Gillian McKeith.

kinger101

artyboy said:

dunstonh said:

Budget 2023: Tax-free pension limits raised - here's what it means for your savings

Thread topic is wrong.   There has been no change to the limit on tax free pensions.    It is still capped at 25% of the current LTA and will be frozen at that level going forward.

The changes were on the taxable side of pensions.

You'll never make a living as a headline writer!

But this is the problem I see on the ML show where he gets IFAs and solicitors to come on and cuts to them for 'expert advice' - he wants snappy one liners, whereas in reality it's rarely that simple.

Regulated activity and elevator pitches rarely go together...

It's possible to be accurate and snappy.  

zagfles

Albermarle said:

zagfles said:

Pat38493 said:

PensionSaverPeter said:

I wonder what will happen if Labour get in and do re-implement the LTA cap?  Would they set it back to £1,073,100 or perhaps higher?

Will those that have since paid in to their pension to take them above the re-implemented cap be given some protection on that amount so they don't again get hit with the punitive tax charges.  It seems a bit disingenuous to hit them when they've have topped up in good faith they they wouldn't get hit with the massive taxes.

I've just listened to an interview with the shadow chancellor where she seemed to imply that they would re-instate the LTA at the current level, and give "doctors" the same exception that judges have today (she was not pressed to further define what she meant by doctors).

Judges use an unregistered scheme. How are they going to do that retrospectively for doctors? It doesn't sound like they've thought it through, in fact how could they, it's only 2 days since the budget. It's knee-jerk political point scoring, not carefully considered policy. There's probably not going to be an election for 18 months, so I wouldn't worry about it yet, wait until the BMA and hopefully some of the few independant and financially aware journalists press them for exact details of their proposals.

I agree that it is probably not worth doing anything yet, or even thinking it about it too hard ( and getting a headache) . 

Chancellor springs totally unexpected policy in budget. Said Chancellor is perfectly aware what the Labour reaction will be.

Oh really? When the Labour shadow health secretary called for exactly that a few months ago?

https://www.theguardian.com/society/2022/sep/03/doctors-pensions-labour-would-abolish-cap-says-wes-streeting

Yeah, he was perfectly aware

zagfles

Interestingly - according to Yougov, the public are completely divided over whether abolishing the LTA was a good idea or not, 37% for and 37% against. But there's significant support for the AA increase, 49% for and 34% against.

Surprisingly, the least popular budget measure was reducing tax on draught beer and cider! 35% for, 49% against!

https://yougov.co.uk/topics/politics/articles-reports/2023/03/16/britons-are-divided-31-33-over-whether-jeremy-hunt

artyboy

kinger101 said:

artyboy said:

dunstonh said:

Budget 2023: Tax-free pension limits raised - here's what it means for your savings

Thread topic is wrong.   There has been no change to the limit on tax free pensions.    It is still capped at 25% of the current LTA and will be frozen at that level going forward.

The changes were on the taxable side of pensions.

You'll never make a living as a headline writer!

But this is the problem I see on the ML show where he gets IFAs and solicitors to come on and cuts to them for 'expert advice' - he wants snappy one liners, whereas in reality it's rarely that simple.

Regulated activity and elevator pitches rarely go together...

It's possible to be accurate and snappy.  

Accurate but snappy... That's the sort of thing that gets you banned on here 

sevenhills

MSE_Emily said:

The maximum annual tax-free amount you can save into a pension once you've taken money out of it will rise from £4,000 to £10,000 from 6 April.

So I could put my £18k SIPP into drawdown and take £4,500 tax free.
I could then reinvest up to £10k as I earn £17k per year? This would be workable in my last few years of employment.

NoMore

sevenhills said:

MSE_Emily said:

The maximum annual tax-free amount you can save into a pension once you've taken money out of it will rise from £4,000 to £10,000 from 6 April.

So I could put my £18k SIPP into drawdown and take £4,500 tax free.
I could then reinvest up to £10k as I earn £17k per year? This would be workable in my last few years of employment.

If you only took the tax free cash you could put the whole 17k gross (13600 net) into your pension, as you wouldn't have triggered the MPAA.

sevenhills

NoMore said:

sevenhills said:

MSE_Emily said:

The maximum annual tax-free amount you can save into a pension once you've taken money out of it will rise from £4,000 to £10,000 from 6 April.

So I could put my £18k SIPP into drawdown and take £4,500 tax free.
I could then reinvest up to £10k as I earn £17k per year? This would be workable in my last few years of employment.

If you only took the tax free cash you could put the whole 17k gross (13600 net) into your pension, as you wouldn't have triggered the MPAA.

I triggered the MPA five years ago, cashing in a pension in order to get a deposit for a mortgage.