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Pension ‘Latest Yr’s Resolution’ could prevent from a 55% tax bill in 2023 – act now | Personal Finance | Finance

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Many individuals will likely be saving into their pension for retirement, but there are rules related to this. Bearing these rules in mind will prevent pension savers from receiving a nasty tax shock, so it’s critical to take motion.

Rob Morgan, chief investment analyst at Charles Stanley, stressed a very important issue pension savers should consider going forward. 

Chancellor Jeremy Hunt confirmed the pension Lifetime Allowance can be frozen for 2 more years.

This implies it is going to be halted at its current level until 2027.

The quantity investors can accumulate of their pension pots throughout their lifetime without being hit with a tax bill is vital.

READ MORE: Canadian MP furious as 125,000 expats have frozen state pension

As pension pots grow and advantages increase over time, Mr Morgan said it’s crucial to make sure one doesn’t “unintentionally stray” above the brink. 

This could be done by monitoring one’s pension pot, and if needed, using other savings vehicles – corresponding to ISAs – to place money into. 

The expert also issued a very important warning because it pertains to annual allowances.

He continued: “Meanwhile, the annual allowance refers back to the £40,000 limit you’ll be able to put in a pension each tax yr, subject to earnings. 

“There stays the chance to hold forward unused allowances from up to 3 previous tax years, subject to earnings, which can assist maximise tax relief. 

READ MORE: Attendance Allowance claimants to see 10.1% rise – recent rates to expect

Mr Morgan also analysed what the Autumn Statement is prone to mean for people in 2023 and beyond.

He added: “The Chancellor of the Exchequer, Jeremy Hunt, unveiled his Autumn Statement last month, aimed toward balancing the nation’s funds while supporting households battling the unrelenting cost of living increases.

“Keen to show fiscal responsibility and to grapple with costly rising debt, the Chancellor focused on maintaining tax receipts and controlling spending while highlighting the importance of controlling inflation and keeping rates of interest as little as possible.

“Dubbed by some a ‘Frozen Statement’, a spread of tax allowances remain at current levels for longer. 

“This implies the effect of ‘fiscal drag’ as wage growth, inflation and investment and property gains put more people into higher tax brackets as time goes on. As well as, there have been some cuts to tax allowances that may affect those taking income or realising gains from their investments.

“With inflation taking an enormous bite out of spending power and a raft of stealth tax rises ahead, there has never been a greater time to take a fresh take a look at your funds.”

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