“Traditionally it rises in line with September’s CPI which for 2020 would have been 0.50 percent.
“That means the lifetime allowance of £1,073,100 would have risen by £5,800 in the upcoming 2021-22 tax year and some pensions will now fall into the taxable bracket.”
Ms Springall concluded by encouraging those worried about what the pension changes would mean for them to seek advice about the matter.
The Money Advice Service offers help, as well as Pension Wise which puts forward free and impartial guidance.
Alternatively, individuals may wish to seek the assistance of a financial adviser, who could provide tailored guidance.
Do you have a money dilemma which you d like a financial expert s opinion on? If you would like to ask one of our finance experts a question, please email your query to
| UPDATED: 09:25, Tue, Mar 9, 2021
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The pension lifetime allowance places a limit on the amount people are able to save into their pension pot tax-free each year. Before the policy change, Britons could expect the sum to increase by the rate of inflation each tax year. However, Chancellor Rishi Sunak made a change in last week’s Budget which means the lifetime allowance will be frozen until 2026.
| UPDATED: 14:19, Sun, Feb 14, 2021
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Rishi Sunak has been tasked with providing Britain’s economic response to the ongoing COVID-19 crisis, and will lay out next steps in his March Budget. The Chancellor is tasked with delivering the Budget amid a significant fiscal deficit, with Government borrowing particularly high. As a result, experts are now predicting a number of changes could be on the table for the Chancellor to announce within the month.
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“However, scrapping higher-rate pension tax relief - the reform which would likely save the largest amount of cash - would neither be easy nor necessarily desirable.”
Mr Selby suggested scrapping high rate pension tax relief in favour of a flat rate could be framed as a redistribution of retirement saving incentives.
This would only work, he said, if the flat rate was set at a higher rate than the current basic rate of 20 percent.
Rishi Sunak’s second Budget as Chancellor is to be delivered against the backdrop of the largest fiscal deficit since the Second World War.
Pension: Monthly contributions needed for a £100k pot (Image: EXPRESS)
Tax relief on pensions can be limited by an annual allowance, which is the most a person can save into their pots before any tax is levied.
Currently, the annual allowance is £40,000 but it may be lower than this for people who have flexibly accessed their pensions or who have a high income.
Those on a high income will have a reduced (tapered) annual allowance if their:
threshold income is over £200,000
adjusted income is over £240,000
The government have confirmed they will tackle coronavirus with the budget (Image: EXPRESS)
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Additionally, people will usually pay tax on contributions if their pension pots are worth more than the lifetime allowance, which is currently sitting at £1,073,100.