Spring Budget 2023 – tax summary

New measures were announced to reduce the tax burden on those contributing to building their pension savings. Most notably:

• the annual allowance, the maximum amount that an individual may add to their pension free of any tax liability, is being increased from £40,000 to £60,000;
• the level of income at which the annual allowance begins to be tapered is rising from £240,000 to £260,000. Fewer individuals will therefore see their annual allowance reduced;
• the money purchase annual allowance (i.e. the maximum tax-free amount that can be saved by individuals already taking their pension) is raising from £4,000 to £10,000;
• the lifetime allowance is being abolished from April 2023. After this date, the government intends that no one should be liable to pay a lifetime allowance charge; and
• the way that various pension lump sums are taxed is changing from the current 55% rate to the marginal rate of the relevant individual.

The geographical scope of these reliefs is being limited. After 6 April 2024, only property situated in the UK will be eligible to relief.

The geographical scope of these reliefs is also being restricted. From April 2024, only charities and Community Amateur Sports Clubs registered in the UK will be eligible to tax relief.

For charities registered in the EU or the European Economic area which were eligible for such reliefs before today (15 March 2023), there will be a transitional period until April 2024.

While no definitive changes or measures were announced today, a consultation has been opened in relation to the taxation of environmental land management and ecosystem service markets.

This consultation will explore whether the scope of inheritance tax reliefs (such as agricultural property relief) should be expanded to cover environmental land management schemes.