Summary of March 2023 Budget

A ‘back to work’ budget was the theme presented by the Chancellor with measures aimed to encourage the 8 million or so economically inactive back into work.

Things aren’t as bleak as forecast last November mainly due to falling energy prices and higher tax revenues. This will reduce Government borrowing this year and next by £30bn less than expected. But anyone hoping that we would see major tax cuts will be sorely disappointed. Whilst the economic backdrop is better than expected, the Government faces challenges of persistent low economic growth and public sector pay demands which makes broad relaxation of the tax burden unlikely for the foreseeable future.

There was though a seismic change announced for pension taxation with the abolition of the lifetime allowance. Many will be happy to see the back of it due to its rather blunt application to defined contribution pension pots and the not inconsiderable complexity it brought with it. It will mean many will start to think about contributing to pensions again who may have stopped for fear of incurring a 55% tax charge in the future. Together with the 50% increase in the Annual Allowance to £60,000 we expect significant interest in pension funding from clients especially at a time of higher personal and company taxation. For further information about the budget measures and how they may affect your investment and retirement planning, please contact Andrew Smith on 01980 504083, or email andrew@michaelforward.co.uk