
John Woolley highlights the key announcements from the Budget impacting financial advisers and their clients
UK Chancellor, Jeremy Hunt, delivered his first formal Budget on 15 March 2023. Highlights of this, which will be of interest to financial advisers, are as follows.
Substantial changes to the registered pension tax rules including:
- The removal of the lifetime allowance in 2023/24 and later years;
- The increase in the annual allowance to £60,000 from £40,000;
- The increase in the money purchase annual allowance to £10,000 from £4,000;
- The increase in the amount of adjusted income at which the pensions taper applies to the annual allowance to £260,000 from £240,000;
- The minimum annual allowance increasing to £10,000 meaning that for somebody who has adjusted income of £360,000 or more, they will have a maximum annual allowance is £10,000;
- A restriction in the PCLS to £268,275 or 25% of the value of a DC fund whichever is the lower; and
- Confirmation that people who have previously made an election to secure a higher lifetime allowance (under say fixed, individual or enhanced protection) will be able to make contributions within their annual allowance in 2023/24 without losing the benefits of that protection. In effect this means they will secure an entitlement to a higher PCLS.
The Government confirmed that the previously announced increase in corporation tax rates will go ahead. This means that for companies with profits of £250,000 or more, they will pay corporation tax at 25%. For companies with profits below this figure, they will pay corporation tax at 19% on profits up to £50,000 and 26.5% on profits over that figure. The current generous position on capital allowances will continue into later financial years.
The current annual ISA allowances will continue so that the individual ISA allowance will continue to be £20,000 and the limit to JISA being £9,000.
Previously announced changes to the CGT annually exempt amount mean that the individual amount reduces from £12,300 to £6,000 in 2023/24 and then to £3,000 in 2024/25. The comparable trustee exempt amount reduces to £3,000 (2023/24) and £1,500 (2024/25).
Previously announced changes to the dividend allowance take effect from 6 April 2023, meaning that the allowance reduces to £1,000 in 2023/24 and £500 in 2024/25.
Announcements made in the Autumn Statement in November 2023 mean that the income tax personal allowance, the income tax thresholds and the NIC allowances are all frozen until 2027/28. The threshold at which the additional 45% tax rate takes effect reduces from £150,000 to £125,140 (the income figure at which a person loses all entitlement to the personal allowance) in 2023/24.
Plenty here for advisers to discuss with their clients.
John Woolley is director of Wooltech Limited