What the Budget 2018 means for your pension

Rachael Oku

by , Writer

30 Oct 2018 /  

30
Oct 2018

What the Budget 2018 means for your pension

Yesterday chancellor Philip Hammond delivered his last Budget speech before Brexit, outlining his plans for the UK economy over the next 12 months. In what has widely been regarded as a “safe budget”, which saw the announcement of a cash injection for the NHS, a freeze on duties and the creation of a special 50p coin to commemorate our departure from the EU, the pension landscape remains unchanged.

There were however a couple of key tax announcements that will have a knock on effect for pensions.

Personal tax allowance rises to £12,500

One of the key Conservative party manifesto promises was to raise the personal allowance to £12,500 by 2020. The government has done one better and plans to increase the personal allowance from £11,800 to £12,500 in April 2019. That means you’ll be able to receive £12,500 of income, whether through employment or pension withdrawals, before tax is charged at your marginal rate.

The higher rate income tax threshold to increase

In April 2019 the higher rate income tax threshold is set to rise from £46,350 to £50,000, meaning that you won’t have to pay 40% tax unless you earn over £50,000.

What we didn’t see in the Budget

Having recently described the £40bn a year that the government spends on pension tax relief as “eye-wateringly expensive”, a reduction in tax relief was widely expected. For now tax relief, the annual allowance and tapered allowance remain unchanged.

There were also no announcements on the progress of the Pensions Dashboard or the introduction of a so-called ‘Dutch-style’ pension scheme which was widely reported as forthcoming this week.

It’s been announced that the Spring Statement will be upgraded to a “full fiscal event” so further announcements on pensions may be forthcoming early next year.

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Capital at risk

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Manage your pension from the palm of your hand

Sign up to PensionBee and we’ll combine your old pensions into a new plan that you can manage online.

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Capital at risk

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