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The 2023 budget and pension allowances

The chancellor has lifted the allowances limiting how much workers can save tax-free into their pensions in his budget today – and has done so dramatically.

The annual allowance will rise from £40,000 to £60,000 for most people, and the lifetime allowance charge will be removed before being abolished altogether. The chancellor has stated that this change is aimed at removing barriers to remaining in work and simplifying the tax system by taking thousands out of the complexity of pension tax.

Most NAHT members have access to the Teachers’ Pension Scheme or the Local Government Pension Scheme, which are high-quality schemes and so have, in some instances, triggered tax charges for members based on the existing allowances. This means that the changes announced today are likely to reduce the number of NAHT members impacted by the annual allowance tax charge and in due course will remove the lifetime allowance charge in its entirety. NAHT’s pensions specialist will consider this announcement in more detail over the coming days and will provide any updates to members where necessary.

First published 15 March 2023