One of the key take outs from the March 2023 Budget was the Chancellor’s announcement that he was removing the pension lifetime allowance charge and increasing the pension annual allowance to £60,000.
HMRC states that pension scheme administrators ‘will need to continue to operate lifetime allowance checks when paying benefits (for example, assessing whether an individual has available lifetime allowance) and to issue benefit crystallisation event statements.
‘However, following the standard lifetime allowance checks, for a benefit crystallisation event occurring after 6 April 2023 no lifetime allowance charge will arise and there will be no requirement to report lifetime allowance charges on the accounting for tax return (AFT).’
This could also mean that individuals can reconsider inheritance tax plans as pensions usually sit outside your estate and so are not subject to inheritance tax (IHT) when you die. Depending on your circumstances, building up your pension pot could play a role in your estate planning strategy. This is a complicated area so it is worth discussing with an expert.