Following the Chancellor’s Spring Budget announcement, Jeremy Hunt is going to abolish the Lifetime Allowance (LTA) to encourage people to continue working and avoid retiring early. The LTA is the maximum anyone can contribute to a pension – which was previously set at £1.07m during the 2022/23 tax year – before facing tax charges.

The chancellor has also increased the £40,000 annual cap on tax-free contributions to pensions. The reported annual allowance will go up to £60,000. The LTA was originally set at £1.5m when it was introduced on A-Day in 2006. It gradually rose to £1.8m in 2010 but fell to just £1m in 2016.

More detail on the specifics of the changes is expected from the treasury shortly.

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