Pension tax changes: what you need to know

A surprise announcement in the Budget to abolish the lifetime allowance for pensions also gave some respite to users of pension drawdown and the annual allowance, explains Zigurds Kronbergs FCA FCCA, senior tax writer, Croner-i

A number of significant changes to pension tax were announced by the Chancellor Jeremy Hunt in the spring Budget, which will affect pension savers and will be welcome news for higher income taxpayers.

The annual allowance is one of three controls on tax relief for pension savings, the others being the annual earnings limit and the lifetime allowance. With effect from 2024–25, the lifetime allowance is to be abolished.

The annual allowance limits the amount of tax-relievable inputs an individual may make in any one tax year to one or more registered pension schemes of which the individual is a member.

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