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.