Pension and ISA tax allowances

Pension Allowances

Tax Year: 2023/2024  2022/2023 
Standard Annual Allowance:  £60,000 £40,000
Money Purchase Annual Allowance:  £10,000 £4,000
Tapered Annual Allowance: Tapered annual allowance applies to those with ‘adjusted income’ of more than £260,000 and ‘threshold income’ of more than £200,000 Tapered annual allowance applies to those with ‘adjusted income’ of more than £240,000 and ‘threshold income’ of more than £200,000
Tax-Free Cash:

£268,275

 

£268,275

 

Glossary

Standard Annual Allowance

Standard Annual Allowance

The annual allowance is a limit to the total amount of contributions that can be paid to defined contribution pension schemes and the total amount of benefits that your clients can build up in a defined benefit pension scheme each year, for tax relief purposes.

Money Purchase Annual Allowance

Money Purchase Annual Allowance

If your clients have flexibly accessed their benefits, the Money Purchase Annual Allowance (MPAA) is the amount that can be paid in one year to their money purchase arrangements without a tax charge applying.

Tapered Annual Allowance

Tapered Annual Allowance

For the taper to apply, the limits on threshold income and adjusted income must both be exceeded. This reduces your clients’ Annual Allowance by £1 for every £2 of adjusted income above £260,000 subject to a maximum reduction of £50,000. The minimum reduced allowance is £10,000. The level of adjusted income at which the maximum reduction in the annual allowance is reached is £360,000.

Tax-Free Cash

Tax-Free Cash

Tax-free cash is limited to the lower of 25% of total benefits or 25% of the current lifetime allowance of £1,073,100. This means a maximum tax-free cash amount of £268,275 can be received by pension savers during their lifetime.

ISA Allowances

Tax year 2023/2024  2022/2023 
ISA allowance £20,000 £20,000
Junior ISA allowance  £9,000 £9,000

Child age 16 – can open an adult cash ISA and contribute £20,000 and take advantage of both adult and junior allowances

£29,000 £29,000
Lifetime ISA allowance

£4,000

 

£4,000

 

Glossary

ISA

ISA

Individual Savings Account that allows your clients to save tax-free, so they pay no tax on any income and capital gains they receive.

Capital Gains Tax

Tax year 2023/2024  2022/2023 
Individual capital gains tax allowance £6,000 £12,300

Glossary

Capital gains tax

Capital gains tax

The tax on the profit made from selling an asset that has increased in value.