The Chancellor of the Exchequer, Jeremy Hunt, unveiled his ‘Budget for Growth’ today. It was the first Budget in several years to include some eye catching announcements affecting pensions.
Lifetime Allowance to be abolished
In an unexpected move, it was announced that the Lifetime Allowance will be abolished.
This will be done in two stages. Firstly, the Lifetime Allowance Tax Charge will be removed from 6th April 2023 and then the Lifetime Allowance itself will be removed from 6th April 2024.
This two step process will be necessary as the Lifetime Allowance would be much more complex to remove at short notice, but by abolishing the tax charge this allows the benefit of the change to be received much earlier than would normally be the case.
Contribution Allowances to increase from 6th April 2023
The Annual Allowance is set to increase from £40,000 to £60,000.
The Money Purchase Annual Allowance will increase from £4,000 to £10,000.
For those subject to tapering of the annual allowance, the adjusted income level at which tapering begins will increase from £240,000 to £260,000. The minimum tapered annual allowance will increase from £4,000 to £10,000.
Pension Commencement Lump Sum (also known as Tax Free Cash)
For anyone not subject to transitional protection, this will be frozen at the current maximum level of £268,275, which is 25% of the current standard Lifetime Allowance.
Note that this information is based on our assessment of the initial Budget announcements and may change. We await the draft legislation in due course, but from what we have seen these appear to be welcome announcements for those affected by the current limits.
March 15th, 2023
The Minerva SIPP can invest in a wider range of assets including commercial property and land, on an individual or group basis. Any combination of permitted investments may be made within a Minerva SIPP including deposit accounts, DFM, open market platform/wrap accounts, stockbroker accounts and trustee investment plans, all held together within the same SIPP.
SIPP Lite is a lower cost option, for those that do not require multiple investment accounts, or access to commercial property and land at outset. SIPP Lite members are restricted to a maximum of one investment account, to run alongside the default SIPP bank account. This investment account could be another bank account or ONE of the following: stockbroker account, DFM, open market platform/wrap account or a trustee investment plan. For individuals that require additional investments at a later date, including commercial property and land, they can upgrade their SIPP Lite plan to a Minerva SIPP.
A Small Self-Administered Scheme (SSAS) is a type of UK registered pension scheme. Each SSAS is governed by its own trust deed and rules and is a separate legal entity to the sponsoring employer. The sponsoring employer establishes the SSAS and invites members to join. Any individual employed by the sponsoring employer (or a participating employer) may join the scheme and all members are appointed as trustees alongside the professional trustee. SSAS trustees have a very wide range of investment options, including the ability to make secured loans to the sponsoring employer of up to 50% of the net asset value of the scheme, subject to certain conditions.
We have been operating in these markets for over 20 years. The SSAS business was formed in 1997, and in 2003 we launched our flagship product, the Minerva SIPP. The range is completed by SIPP Lite, which has been available since July 2012.
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