After crashing out in the early stages of the first Conservative Party leadership race of 2022, Jeremy Hunt lamented that he had missed his moment. “It has become obvious to me that you only get one big shot at this,” he said as he resigned himself to a life on the back benches, “and I had mine in 2019.”
Seven months and two Tory Party leaders later, the now-Chancellor of the Exchequer strikes a more upbeat tone. As he announced measures to encourage the over-50s back to work, he joked that he took up a new job in finance soon after his 50th birthday and responded to a heckler that “it was going well, thank you”.
It has been just four months since the last time a Chancellor announced a budget and there is no doubt that this one has been far better received than the last one. But with markets reeling in fear of another banking crisis following the collapse of Silicon Valley Bank and Signature Bank in the US, there has been a disappointingly muted response from domestic stocks.
Still, the 2023 budget was undoubtedly a pro-business one, and there is a lot for investors to dig into. In this article, we’ll provide more colour to the budget announcements which might impact your portfolio, whether that be from a personal finance perspective or the impact on individual holdings.
Pension lifetime allowance abolished
Starting with the impact of the removal of the pensions lifetime allowance (LTA), which has got a lot of people talking.
The previous cap on tax free pensions savings stood at £1.073m and rumours ahead of the statement suggested that Hunt might raise it to £1.8m. But with a theatrical flourish, the Chancellor abolished the LTA completely. The lifetime allowance charge will be removed from April 2023 before the allowance is abolished entirely from April 2024.
Plus there has been a boost to the annual contribution allowance (from £40,000 to £60,000) and an increase in both the money purchase annual allowance (MPAA) and minimum taper annual allowance (MTAA) from £4,000 to £10,000.
The changes come in response to the fear that many high earners (especially in the NHS) are retiring to avoid the tax charges on pension savings above the previous LTA.
The taxes and allowances on pensions have…
