Spring Budget Commentary 2023.

The Chancellor of the Exchequer, Jeremy Hunt, has today delivered his Budget Statement.


It was widely reported in the press yesterday that the Chancellor would announce that the pension Lifetime Allowance (LTA) would rise from the present £1,073,100 to £1,800,000.  However, in a surprise announcement, the Chancellor has decided to abolish the allowance altogether.

The LTA was the amount of pension you can save before you are taxed on it.  Any amount you have in your pension above the LTA was subject to a tax charge of up to 55%.  This charge will be removed from 6 April 2023 before fully abolishing the LTA from April 2024.  The maximum Tax-Free Cash Lump Sum for those without LTA protections will be retained at its current level of £268,275 and will be frozen thereafter.

Its abolition will be welcome news for many pension savers who can continue to save or draw their pension benefits without being concerned about this penal charge.  It will also remove the financial disincentive which was affecting many senior doctors and consultants in the NHS who had been reducing hours or retiring early, as the tax charges outweighed the benefits.

In addition, it has been announced the Annual Allowance for pension contributions, which has been subject to much of the same debate, will rise from £40,000 to £60,000 and individuals will continue to be able to carry forward unused Annual Allowances from the 3 previous tax years.  Furthermore, the Money Purchase Annual Allowance, which limits the amount people can put into their pension tax-free after accessing their pot, is also set to rise from £4,000 to £10,000.  The minimum Tapered Annual Allowance will also increase from £4,000 to £10,000 from 6 April 2023 with the adjusted income threshold for the Tapered Annual Allowance set to be increased from £240,000 to £260,000.

Paul Morton, Investment Planning Director, comments: “Pensions have previously suffered from a ‘cap’ (LTA) and ‘collar’ (AA) structure, i.e. the amount you could build up in a pension was being squeezed from two angles. Removing the ‘cap’ and loosening the ‘collar’ allows a bit of breathing room and is a step towards a simpler system for pensions.”

Income, capital gains and savings taxes

From an income tax rates and tax thresholds point of view, these were set at the Autumn Statement when Mr Hunt announced all would remain frozen until 2027/28.

As a reminder, set out below are the tax rates and thresholds for England, Wales and Northern Ireland from 2023/24:

*your Personal Allowance may be greater than £12,570 if you claim Marriage Allowance or you are eligible for the Blind Person’s Allowance.  It can also be reduced for high earners (earning more than £100,000) and is zero if your income is £125,140 or above.

Dividend tax allowance

You only have to pay tax if your dividends exceed the dividend tax allowance in the tax year. This is currently £1,000 and will be cut to just £500 from April 2024.

The tax you pay depends on your income band – please note, you must add your dividend income to any other taxable income to determine the rate of tax you will pay.

Capital Gains Tax (CGT)

The Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000 from April 2023 and then halve again to £3,000 from April 2024.

Above this, CGT will continue to be paid at 10% (18% for second properties or buy to let) if the chargeable gain fell within an individual’s basic rate band. Any gain that is above an individual’s basic rate band will be charged at 20% (28% for second properties or buy to let).

Personal savings allowance

This was first introduced in 2016 and applies to savings income such as interest on savings accounts, gilts or corporate bonds.  The allowance remains at £1,000 for basic rate tax payers and £500 for higher rate tax payers.


The ISA allowance subscription limit for 2023/24 will remain unchanged at £20,000 and the annual subscription limit for Junior ISAs and Child Trust Funds will remain at £9,000.

The latest news is brought to you by WEALTH at work, a leading financial wellbeing and retirement specialist. WEALTH at work and my wealth are trading names of Wealth at Work Limited which is a member of the Wealth at Work group of companies.

Links to websites external to those of Wealth at Work Limited (also referred to here as 'we', 'us', 'our' 'ours') will usually contain some content that is not written by us and over which we have no authority and which we do not endorse. Any hyperlinks or references to third party websites are provided for your convenience only. Therefore please be aware that we do not accept responsibility for the content of any third party site(s) except content that is specifically attributed to us or our employees and where we are the authors of such content. Further, we accept no responsibility for any malicious codes (or their consequences) of external sites. Nor do we endorse any organisation or publication to which we link and make no representations about them.