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What do the Government’s pension changes mean for you?

Archive for March, 2023

What do the Government’s pension changes mean for you?

Thursday, March 30th, 2023

The Chancellor of the Exchequer recently delivered his Spring Budget  and among the raft of measures were big changes to pension allowances.

As part of the Government’s effort to drive growth, Mr Hunt wants to tackle economic inactivity, as there are over seven million adults of working age who aren’t in work (excluding students).

The Chancellor hopes that his pension reforms might encourage people who’ve retired early to rejoin the workforce, and those who are close to retirement to remain in work.

So what did he announce and what impact will the changes have on you?

And if you’re retired, are you now thinking of returning to work?

Let’s take a closer look at what the Chancellor has announced…

Tax-free pension limits raised

The pensions annual tax-free allowance is being increased from £40,000 to £60,000. So if you’re thinking of paying extra into your pension to make up for any years that you didn’t contribute much then this could be good news for you.

Lifetime allowance charge scrapped

The maximum amount you can draw from your pension in your lifetime without being hit with a higher tax bill is known as the lifetime allowance and currently stands at £1.07m.

If you go over the allowance, you may have to pay a tax charge on the excess if you take a lump sum or draw income from your pension pot.

So it was significant to hear from Mr Hunt that the charge would be scrapped this April , with the abolition of the lifetime allowance following next year.

The Chancellor believes this will simplify the UK’s tax system and incentivise older people to stay in work for longer.

It’s worth pointing out, though, that Labour swiftly promised to reverse this measure if it wins the next general election, while many analysts and experts are openly doubting whether the change will make a difference in encouraging people to remain in the labour market.

One thing is for sure, pensions look set to be a key battleground when the election finally comes.

Tapered Annual Allowance revised

If you earn a high salary with a threshold income above £200,000 or an adjusted income above £240,000  then the Tapered Annual Allowance limits how much tax relief you can get on your pension savings.

However, the minimum Tapered Annual Allowance is to increase from £4,000 to £10,000, and the adjusted income threshold will go up from £240,000 to £260,000.

Money Purchase Annual Allowance to increase

The Money Purchase Annual Allowance (MPAA) limits how much you can contribute to your pension tax-free every year after you withdraw money, which can make a big difference if you want to top up your income by dipping into your pension savings.

The Government therefore wants to give pension savers greater flexibility by increasing the MPAA to £10,000.

Pension Commencement Lump Sum

You can receive a tax-free lump sum when you become entitled to your pension benefits; this is called the Pension Commencement Lump Sum (PCLS). The maximum amount that most people can claim is currently 25 per cent of their available lifetime allowance when this sum is taken. Although the lifetime allowance is being scrapped, the PCLS will remain at a maximum of £268,275 and then be frozen.

So if you’re retired, will the changes to pensions make you go back into the labour market?

If you’re tempted, a recent poll by Interactive Investor suggests you’ll be in a minority as just nine per cent said increasing the pension annual allowance and MPAA would motivate them to return to work, while 54 per cent said scrapping the lifetime allowance wouldn’t encourage them to work as they like being retired.

It will be interesting to see what impact, if any, these measures will actually have, as we know many of you will have worked long and hard to enjoy a fulfilling retirement.

If you have any questions about what the latest changes to the pension system mean for you and your finances, please don’t hesitate to get in touch, and we’ll be happy to speak with you.

March market commentary

Thursday, March 2nd, 2023


Russia’s invasion of Ukraine in February 2022 had a huge impact on the global economy, pushing up commodity prices, inflation and living costs around the world.

Last month saw the first anniversary of the invasion, and amid the renewed displays of solidarity from leaders in the UK, the US and the European Union, was the uncomfortable reminder that this could be a prolonged conflict.

Policymakers are therefore having to balance their continued support for Ukraine with minimising the economic fallout, and the effects this will have on households and businesses.

As always, let’s take a look at the details to see what’s happening in key markets across the globe.


The month began with the Bank of England raising interest rates from 3.5% to 4%. This was the tenth rate hike in a row and means they are at their highest level in 14 years. However, there was some slightly better news as the Office for National Statistics (ONS) reported that although GDP fell by 0.5% in December, the economy saw zero growth over the final quarter of 2022 as a whole. This meant that the UK narrowly avoided slipping into recession last year, although it remains to be seen whether this has been merely postponed, rather than avoided.

Inflation, meanwhile, has continued to fall, dropping from 10.5% in December to 10.1% in January. Chancellor of the Exchequer Jeremy Hunt is to deliver his Spring Budget in March, and has already ruled out generous tax cuts, arguing that the “best tax cut right now is a cut in inflation”. However, there has been pressure on the Chancellor to announce tax cuts, given ongoing cost of living pressures, widespread industrial action, and notably, the Government seeing a surprise £5.4bn surplus in its finances in January.

The mixed economic picture led to key sectors seeing varying fortunes. For instance, while retail sales rose unexpectedly by 0.5% in January, figures from Nationwide showed house prices fell for the fifth month in a row, dropping by 0.6% to an average of £258,297.

Meanwhile, it was a good month for energy companies, with British Gas owner Centrica reporting profits of £3.3bn in 2022, and Shell revealing that its profits doubled last year to £32.2bn – the highest in its 115-year history. In addition, BP reported record annual profits of £23bn in 2022, while soaring energy prices helped EDF’s UK arm return to profit last year after seeing losses in 2021.

There were also several notable headlines in the UK employment market, with carmaker Ford announcing plans to cut 1,300 jobs around the country over the next two years. There was better news from Aldi, which confirmed it intends to create 6,000 new jobs in the UK this year.

As ever, Brexit continues to be a huge subject of debate, with many citing it as a key factor behind food shortages across the UK, although high energy prices and freak weather conditions have also contributed to supply issues nationwide.

On the financial markets, the FTSE-100 Index ended the month at 7,857 points, up 1.10% on January. The pound ended February up 0.42% against the dollar.


Last month saw the first anniversary of Russia’s invasion of Ukraine, and a renewed display of international resolve and solidarity from the UK, Europe and the US.

In early February, President Volodymyr Zelenskyy came to the UK to address MPs in Westminster Hall and meet King Charles at Buckingham Palace, before travelling to Brussels to address the European Parliament.

Later on in the month, as the anniversary approached, US President Joe Biden made a surprise visit to Kyiv, where he pledged to support Ukraine for “as long as it takes”.

Meanwhile, China has called for Russia and Ukraine to reach a political settlement to end the war, and President Zelenskyy has said he wants to meet China’s President Xi Jinping after Beijing published a 12-point peace plan.


February ended with the European Union reaching a new deal with the UK over post-Brexit trade arrangements for Northern Ireland, although whether this wins the approval of the Democratic Unionist Party in Northern Ireland remains to be seen.

Last month also saw the European Commission adopt tougher data protection measures by ordering its staff to remove the TikTok app from their phones and corporate devices, due to concerns that user data is being harvested and sent to the Chinese government.

In other news, Gas Infrastructure Europe confirmed that Europe was on course to end winter with the amount of gas in storage close to a record high – a significant development as it means the continent is becoming less reliant on energy from Russia. However, there was less positive news for French energy provider EDF, which saw record losses of £16bn, despite soaring energy prices in 2022.

Germany, meanwhile, saw industrial action during February, with a walkout by ground crew over pay bringing seven major airports to a standstill.

On the financial markets, Germany’s DAX index saw an increase of 1.59% in February to end the month at 15,369 points. Meanwhile, the French CAC 40 index rose by 2.75% in the month to end at 7,276 points.


The US Federal Reserve started the month by raising interest rates by 0.25%, which leaves the bank’s benchmark rate at 4.5%-4.75% – the highest level since 2007. Many experts, including economists polled by Reuters, believe the Fed will raise interest rates at least two more times in the next few months, as it continues working to stabilise prices.

This comes as inflation continues to cool, falling from 6.5% in the 12 months to December to 6.4% in the year to January. Although this means inflation has now eased for seven consecutive months, it remains well above the Fed’s 2% target, driven by increases in the cost of food, energy and housing.

The US economy performed strongly in the face of continuing pressures on the cost of living and rising interest rates. During the final quarter of 2022, the economy grew by 2.9% year-on-year. Although this was down on the 3.2% figure recorded in the previous quarter, it was slightly better than expected. Nevertheless, it has not eased fears among some analysts that a recession is inevitable.

It’s a mixed picture in the US, with official figures showing slumps in construction activity and home sales. However, data from the Labor Department showed that employers added 517,000 jobs in January, which helped push the unemployment rate down to 3.4% – its lowest level in more than half a century.

Meanwhile, retail sales rose by 3.0% last month, the largest increase since March 2021. This backed up the findings of a study by the Bank of America Institute, which attributed increased spending in January on consumers having “solid cash buffers and borrowing capacity”, even if they were on relatively low incomes.

The difficult global economic climate weighed heavily on the financial markets during February, with the Dow Jones falling by 4.21% to end at 32,656, and the more broadly-based S&P 500 index falling by 3.62% to end at 3,970.

Far East

This month saw China’s top foreign policy official Wang Yi visit Russian President Vladimir Putin in Moscow. But equally significantly, Beijing has called for peace talks between Russia and Ukraine, publishing a 12-point position paper on what needs to be done to end the war.

The Kremlin has confirmed it is paying “a great deal of attention” to China’s peace plan, and is analysing its proposal in detail.

Much has been made of the timing of this intervention, given worsening diplomatic relations between China and the US in recent months. Nevertheless, trade between the two nations hit a record high last year, with imports and exports totalling £572.6bn in 2022.

The recent easing of Covid restrictions in China looks set to trigger renewed growth in China, with the IMF predicting growth of 5.2% this year, compared with just 3% last year.

Meanwhile in Japan, official figures showed the economy is growing at a much slower pace than had been expected. Whereas many forecasts had predicted growth of 2% in the final quarter of 2022, the final figure was just 0.6% – and this slow growth coincides with inflation standing at a 42-year high.

On the financial markets, Hong Kong’s Hang Seng index fell by 9.41% to end February at 19,785, while Japan’s Nikkei Dow index rose by 3.46% to 27,445. China’s Shanghai Composite index rose by 0.74% to 3,279, while the market in South Korea fell by 0.50% to end at 2,412.

Emerging Markets

India looks set to become a much bigger player on the global stage, with the IMF predicting that emerging and developing markets will account for about 80% of global growth in 2023 and 2024. India will contribute more than 15% of this growth.

In what may be a reflection of its growing international status, Air India has ordered 470 new aircraft, which the company says will help it offer a “world-class proposition serving global travellers with an Indian heart”.

Brazil is also enjoying an economic surge, with figures from its central bank showing activity increased by 2.0% in 2022.

Meanwhile, Russia has announced that it will respond to a price cap on oil products imposed by other major economies by reducing production of crude oil by 500,000 barrels a day.

On the financial markets, India’s BSE Sensex index fell by 2.22% to end the month at 17,538, while Russia’s MOEX index saw an upturn of 1.23% to end at 2,252. Brazil’s Bovespa index, meanwhile, fell by 6.58% to end the month at 105,961.

And Finally…

Just weeks after a suspected Chinese spy balloon over the US triggered talk that aliens had finally landed, another mysterious object has led to some wondering if extraterrestrials are walking among us.

A giant sphere, referred to as “Godzilla egg” by a BBC reporter, washed ashore in the Japanese city of Hamamatsu. Police were alerted immediately, but intriguingly, they’ve not yet identified what the strange object is. Fascinating, as Mr Spock might say…

Back to more earthly matters, and the latest in our reports of iconic images being seen in food. Graham and Cathy Bloye were enjoying cauliflower wings at The Stanborough Beefeater in Welwyn Garden City when they noticed that one of the wings resembled the outline of the UK.

But after sharing images of their patriotic meal on social media, people viewing the post noticed that several key parts of the country were missing – notably the Isle of Wight and the Isle of Man. We’ve also taken a look at the image ourselves, and it’s not just British islands that are missing – East Anglia is clearly missing too.

Get ready for the end of the tax year

Wednesday, March 1st, 2023

The end of the tax year is fast approaching and time is running out.

So in the weeks ahead of the April 5th deadline, what steps should you be taking to make the most of your money and reduce your tax bill?

Here are just a few areas you could look at.

Use your ISA allowance

You can save or invest up to £20,000 a year with a cash ISA, a stocks and shares ISA, or a combination of the two, tax-free.

If you haven’t invested this amount by April 5th, you can’t carry your allowance over and you’ll end up missing out.

Top up your pension contributions

You can pay up to £40,000 into your pension in a single tax year before you have to pay tax on it, so if you aren’t particularly near to this limit, diverting some money into your pension could be a good way to mitigate your wider tax bill.

Use Your Capital Gains Tax allowance

If you sell assets or personal possessions that are worth more than £6,000 – apart from your car – you must pay tax if the proceeds exceed £12,300.

Genuine gifts from a civil partner or spouse don’t count towards the allowance, so it’s worth checking where potential tax savings could be made.

Use your dividend allowance

A dividend allowance is an amount of dividends that you don’t have to pay tax on, which is currently £2,000. So if you’re a company director or shareholder, or get dividends through a Stocks and Shares ISA, you can receive up to this amount tax-free.

Use your Personal Savings Allowance

This allowance lets you earn interest on your savings without paying tax on it, but the size of the allowance depends on your income tax rate.

If you’re a basic rate taxpayer (20 per cent), you can earn £1,000 in savings interest per year tax-free, while higher rate taxpayers (40 per cent) can earn £500 in savings interest per year with no tax. Additional rate taxpayers (45 per cent) don’t get an allowance.

This is by no means an exhaustive list, and many of these options may not even apply to you.

That’s why it’s definitely worth speaking with a professional, regulated financial adviser with experience in this field. They can talk through the choices open to you to help you make the right decisions.

April 5th isn’t far away, so don’t delay!