• November 30, 2023
 New pension allowances 2023: what they mean and how to maximise them

New pension allowances 2023: what they mean and how to maximise them

Following the announcement of the Spring Budget on 15th March, some of the biggest changes affect pension legislation and allowances. These changes are set to have a significant, positive impact on high-earning clients and their pensions.

Here’s what you need to know about changes to your clients’ pension allowance and what you can do to help them make the most of the new legislations.

Pension lifetime allowance changes

One of the biggest changes to pensions following the 2023 Spring Budget announcement on 15th March is the news that the pensions lifetime allowance (LTA) is to be scrapped.

Previously, the LTA was set at £1,073,100, meaning anyone saving more than this would be taxed up to 55% on pension savings exceeding this amount.

From 6th April 2023, there will be no government limit on the amount people can save tax-free over their lifetime. This will significantly benefit higher-earning clients, enabling them to increase their pension investments without being penalised for exceeding a set limit.

If you have higher-earning clients whose circumstances allow for an increase in pension contributions, or older clients who wish to continue work in a high-salary position, now is the perfect time for them to make the most of these tax-free investments.

Pension annual allowance changes

Another significant change to pension allowances following the 2023 Spring Budget is the increase in the annual tax-free allowance. Previously set at £40,000, the government has increased this by 50% to a £60,000 allowance within a single tax year.

This is set to include contributions made by individuals and their employers. It will mean that basic-rate tax payers will be able to claim the 25% top-up on eligible contributions up to the value of £60,000.

Alongside the main allowance, the minimum amount of the tapered annual allowance will also increase from £4,000 to £10,000 from 6th April 2023. The adjusted income figure will also be uprated from £240,000 to £260,000. This means that high-earning clients with a threshold income of more than £200,000 and adjusted income of £360,000 or more will have a tapered annual allowance of £10,000 in 2023/24.

Any high-earning clients whose circumstances would allow for an increase in their annual pension contributions should think about making the most of this tax-free opportunity.

Money purchase annual allowance

Changes to the money purchase annual allowance (MPAA) will affect older clients who are currently accessing their pensions before retirement while still paying into it.

The MPAA is a limit on the amount people over 55 can contribute to a defined contribution pension with tax reliefs, once they start drawing on it. The previous MPAA was set at £4,000, but has now been increased to £10,000. This will benefit those clients wishing to rebuild their pension if they’ve been forced to draw on it prematurely.

The takeaway

With the recently announced budget changes, now is the perfect time to encourage higher-earning clients to reassess their pension contributions to maximise the tax-free benefits of the new legislations.

For more ways to help clients maximise their pension investments, contact CTT Private Client.

This article was submitted to be published by CTT Group as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.

CTT Group


  CTT Group is an established Legal Services firm providing multi-disciplinary support for the UK’s Professional Adviser community. Their expertise spans multiple areas of Law, Estate Planning, Finance and Tax matters. CTT Group is recognised as a leading figure in the industry due to their wealth of experience and technical knowledge in the legal and financial sectors. CTT Group is made up of six areas: CTT Professional Services: A specialised knowledge hub designed for the Professional Adviser community and CTT Group members. The Professional Services team will provide you with a bespoke training and support package to suit any business. This includes the New entrants team, Training, Estate Planning Team, Professional Indemnity Insurance Service & the Resource Hub. CTT Tax and Trust: a premium support system for the Professional Adviser community, providing professional executor and Trustee services. They specialise in Estate Planning, Tax and Trust matters and have a wealth of knowledge and experience in delivering the right solutions for your clients. CTT Legacy Software: Ground-breaking legal software that will change how you work. Legacy was explicitly designed with you and your business in mind, so it will seamlessly align with your needs. It can also be tailored to suit your business needs, giving you complete control over your client journey. CTT Legal: Providing innovative and modern solutions to even the most complex legal problems. CTT Legal offer comprehensive Legal advice alongside CTT Law; an SRA-regulated law firm and strategic partner of CTT Group. This includes Residential and Commercial Conveyancing, Litigation, Document production, Client care, Professional Executor & Professional Executor. CTT Accountancy: A newly established Accountancy firm that will work in partnership with you and your business. CTT Accountancy is a practice of highly skilled and experienced accountants with expertise in trust matters, uniquely positioned to offer your clients a range of accounting services, whatever their needs. CTT Private Client: Offering individual professional advice to high-net-worth individuals with various financial situations. Their specialist team have a wealth of knowledge and will work with you to understand your requirements and provide bespoke advice. Click here for more information: https://ctt-group.co.uk/ Contact: CTT Group Tel: 01926 514 390 Email: enquiries@ctt-group.co.uk Address: CTT Group, Gables House 62 Kenilworth road Leamington Spa CV32 6JX