Annual allowance – don’t you just hate the restrictions? Partner, Alec James gives an update on the tax charges on your pensions.
Many readers may not be aware that when the pension savings annual allowance was first introduced in April 2006, the allowance was £215,000 rising in successive years to £255,000.
This meant that considering the annual allowance position was rarely an issue for doctors. However, when the markets took a downturn in 2008, it was seen by successive governments as a mechanism to generate more tax by reductions in the allowance. The allowance is now normally £40,000, but can decrease down to £4,000 if tapering is applied.
In this article is a summary of the rules and the upcoming changes. More...
The Chancellor, Jeremy Hunt, presented his Autumn Statement on Thursday 17 November 2022.
The announcements have received mixed response, with many professional commentators highlighting that further tax measures and spending cuts may be announced after the 2024 election by whatever government comes to power.
Although headline income tax rates remain unchanged the thresholds at which different rates of tax apply remain unchanged except for the upper tax rate of 45% that will apply from £125,140, previously £150,000, from April 2023.
The term ‘fiscal drag’ has been much used by professional commentators to highlight that although basic and higher rates of tax thresholds have remained unchanged, it will, in a period of increasing wages, bring more individuals into paying higher rates of tax.
For example, the number of people paying 40% or 45% tax has risen from 4.1 million in 2019 to 6.1 million prior to the Autumn Statement and will rise further. More...