Following the first Budget speech delivered by Jeremy Hunt, the Chancellor of the Exchequer, we have taken a look at how some of his key decisions will affect you and your finances.
How will your mortgage be impacted by the Spring Budget 2023?
There wasn’t much for current or prospective homeowners in the Budget, but there was a nugget of good news for those looking for a new mortgage in 2023.
The Office for Budget Responsibility has revised its forecast for inflation, suggesting that it will reduce to 2.9% by the end of this year. With inflation falling further and faster than previously anticipated, it may mean there is less requirement for the Bank of England’s Monetary Policy Committee to further increase the base rate of interest.
Commentary suggests that we are approaching the peak base rate rise, meaning that we should see more stable, perhaps lower, mortgage rates in the foreseeable future.
How you can benefit from the Budget’s pension changes
What was predicted to be quite a boring Budget turned out to be anything but this week. Amidst the announcement of a few good ‘retail policies’, Chancellor Jeremy Hunt also shared some good news for private pension savers. So, who stands to benefit?
Limited company directors
One of the big changes to pensions is the increase in the annual tax-free savings allowance. This will rise from £40,000 to £60,000 per year from 6th April 2023 and could be a great way for business owners to build their pensions and reduce their tax bill.
It is particularly good for business owners who want to quickly build their pension pots, as from next year an additional £20,000 worth of profit can be diverted into pension funds without additional tax penalty.
GPs and NHS Consultants
Currently, those working in higher-paid roles within the NHS will quite often reach the current lifetime tax-free pension allowance of £1.07 million by the time they reach 55. Some have voiced that this leaves little incentive to keep working. Now, with the lifetime allowance scrapped, some may wish to continue working for longer – at least this is what the Government hopes.
If you’re working for the NHS and beginning to consider your retirement options, do get in touch with us to find out more about what this change means for you.
What else changed?
If you’ve started drawing on a pension but are now considering returning to work, the amount you can save into a pension will increase – from £4,000 to £10,000.
The tapering allowance has also been made more generous. Currently, your tax-free allowance begins to reduce by £1 for every £2 you earn over £240,000, tapering your allowance down to £4,000. From the next tax year, this threshold will increase to £260,000 and taper down to a £10,000 annual allowance.
