Chancellor Jeremy Hunt's blockbuster Budget for "Britain's growth" certainly proved to be a big one for pensions, despite warnings to beware the Ides of March.
After nearly nine years of waiting for another significant pensions announcement, just like buses, three came along at once: the end of the lifetime allowance, changes to the annual allowance and, importantly, an uplift to the money purchase annual allowance.
Alongside these measures, Hunt aimed to push 700,000 lead carers of children, who are on universal credit, back into the workforce or to increase their working hours by boosting childcare incentives and making it harder to claim universal credit.
In his speech to parliament, the chancellor said: "Those who can work, should work because independence is always better than dependence.
“We need to plug the skills gaps and give people the qualifications, support and incentives they need to get into work. Through this plan, we can address labour shortages, bring down inflation, and put Britain back on a path to growth.”
According to chancellor Hunt, these measures are designed to boost Britain's employed population and help keep more older workers in the workforce - an important point at a time when the Office for National Statistics revealed at least 1.7mn people would come back into Britain's workplaces, if they felt enough support to do so.
The pension changes have gone down well with people so far, but it certainly means more work for advisers.
Catherine Thirlaway, senior manager for consultancy Alpha FMC, commented: "This Budget won’t cause the furore the notorious September 2022 Budget did. But there is a lot of change afoot, meaning confusion for consumers and heavy lifting for advisers:
"The end of the lifetime allowance, increase in the annual allowance and a potential rise in the state pension age have thrown a lot of people’s retirement plans up in the air. It may encourage public sector workers to stay working, but it could also push private sector workers to retire early."
But let us have a look at what the biggest tax changes were this time round: it's time for the FTAdviser tax table to stage a comeback after a record year for it in 2022, when it appeared no less than four times, like a series of straight-to-video movie sequels.
| Spring Statement 2022 | November 17 | Budget 2023 | |
| Income tax and personal allowances | Bringing the £12,570 threshold into immediate effect. Basic rate of income tax will be cut from 20p in the pound to 19p from 2024. | Lowering the additional tax rate threshold from £150,000 to £125,000. Other personal thresholds frozen until 2028. | The lower rate is expected to come into force this April. The threshold of income at which qualifying |
| Dividend tax | - | Dividend threshold to lower from £2,000 to £1,000 next year, then to £500 from April 2024. | |
| Pension allowances | - | LTA thresholds remain frozen, as does MPAA and PLA. Increasing pension credit for poorest pensioners. Will also protect the triple lock. This means Pension credit and state pension going up 10.1%. | No more lifetime allowance - it will be abolished completely in a future Finance Bill. Annual Allowance set to rise from £40,000 to £60,000. MPAA set to revert to £10,000 from £4,000. PCLS will be retained at £268,375 & frozen thereafter. |
| Capital gains tax | - | CGT exemption to decrease from £12,300 to £6,150 next year, then £3,000 in April 2024. | Tighter rules around disclosure of disposal of assets under conditional contracts to allow HMRC more time to assess tax due on capital gains. |
| Bank levy | - | From April 2023, banks will be charged an additional 3% rate on their profits above £100mn; £280mn will be invested in the Department of Work and Pensions to crack down on benefit fraud and errors. | |
| Inheritance tax | - | The freeze on the IHT threshold remains for both the nil-rate band and residential nil-rate bands to 2028 | No uplift for IHT thresholds; current freeze remains. |
| Corporation tax | Planned tax rises will still go ahead in 2023. | - | Corporation tax will still rise to 25% from 19% as planned but super deduction being replaced with "full capital expensing" for 3 years to try and support businesses. |
| Tax on savings interest | - | No changes to EIS. | Maintaining limits on Isas. |
| National Insurance contribution | - | - | Now a thing of the past |
| VAT | Households with energy-saving materials installed will pay 0 per cent VAT on them. | - | |
| Stamp Duty Land Tax | - | Changes will only last until 2025. For current homeowners, SDLT will be payable above £250,000 and fall back to £125,000 in 2025. | |
| Environmental taxes and energy support for homeowners | Plans to remove some of the red tape around people using alternative energy sources. A 5p cut in the price of petrol per litre for 12 months. | From January 1 to March 28, levy will rise from 25% to 30%; From January 1 new temporary 45% levy on electricity generators. | The Energy Price Guarantee will be kept at £2,500 for an additional three months from April to June, saving a typical household £160. End to the energy premium paid by households who use pre-payment meters, which will save 4mn families £45 a year from July. |
| Business rates and Restart | Confirmation of the reliefs already mentioned. | Proceeding with the revaluation of business properties from April 2023, but there will be a tax cut over the next five years and the introduction of a new relief scheme. | Enhanced credit for R&D of £27 for every £100 spent on R&D. Small businesses investment allowance increased to £1mn. |
| Entrepreneurs' relief (Business Asset Disposal Relief) | - | No changes to R&D and will publish a decision on Solvency II to unlock development for growing British companies. |
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| New: Health and Social Care tax | - | DWP and NHS will publish a plan for the number of health pros UK will need in 5, 10 and 15 years' time. Council taxes freed to rise up to 5% over next two years to cover social care costs. | |
| New: Residential Property Development Tax | - | - | Pledge to implement Edinburgh reforms regarding real estate investment trusts. Extension to the mortgage guarantee scheme. |
| New: Employment Allowance relief | From April 2022, the allowance will increase to £5,000 and will affect half a million small businesses. | - | |
| IR35 | - | - | As outlined in Hunt's turnaround Budget in October 22, there will now be no reversal of off-payroll working reforms introduced in 2017 and 2021. The original changes will go ahead as planned. |
| New: Childcare benefit | - | - | Childcare support will come up-front. The limit on maximum support will rise after being frozen at £646 a month for years. The 30 hours' free childcare per week for 38 weeks support will be extended to one- and two-year-olds from September 2024. |
| New: Pushing people on Universal Credit back to work | - | - | Strengthened work search requirements are expected to encourage over 700,000 lead carers of children on Universal Credit to look for work or increase their hours. The administrative Earnings Threshold will be increased from the equivalent of 15 to 18 hours of earnings at the National Living Wage for an individual claimant. The couples AET will be removed entirely. This is expected to ask over 100,000 additional claimants to meet more regularly with a Work Coach and take active steps to move into work or increase their earnings. |
| New: Tax Avoidance | - | - | Tougher measures to crack down on tax avoidance and tax avoidance schemes. The government will double the maximum sentences for the most egregious cases of tax fraud from 7 to 14 years. |
