The pension lifetime allowance, which limits the amount savers can contribute to their pensions without a tax charge, will be abolished, Chancellor Jeremy Hunt announced in today's Spring Budget.
Currently, people who save more than the current allowance level of £1,073,100 in their workplace defined benefit pension scheme face a tax charge of either 25% or 55% on the excess (depending on how they receive it).
The Chancellor was expected to raise this limit to encourage pension savers to stay in work longer - instead, he revealed he would "go further" and remove the tax charge from April 2023, before abolishing the allowance altogether from April 2024.
"I do not want any doctor to retire early because of the way pension taxes work," he said.
"As Chancellor, I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons."
Hunt also announced an increase to the annual tax-free allowance for pension contributions, from £40,000 to £60,000.
Other measures affecting individuals confirmed today include a three-month extension of the energy price guarantee, increases to free childcare and the introduction of ‘returnerships' to incentivise over-50s to return to work.
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