As you prepare for the upcoming tax year, starting on the 6th of April 2023, it’s essential to stay informed about the significant updates pertaining to workplace pensions and payroll. By keeping yourself up-to-date, you can ensure a smooth transition and compliance with the latest regulations.
Annual Allowance
On the 15th of March, an important announcement was made regarding the annual allowance. Starting from April 2023, the annual allowance will see a significant increase, rising from £40,000 to £60,000.
The annual allowance represents the maximum amount of pension contributions that can be made without incurring tax. It’s worth noting that any unused portion of the annual allowance from a given year can be carried forward for up to 3 tax years, under certain circumstances.
In addition, the Tapered Annual allowance will also experience an adjustment, climbing from £240,000 to £260,000. This tapered allowance entails that for every £2 that your adjusted income surpasses £240,000, your annual allowance for the present tax year diminishes by £1, reaching a minimum of £4,000.
Moreover, as of April 2023, the adjusted income threshold will rise to £260,000, while the minimum annual allowance subject to tapering will increase to £10,000.
Lifetime Allowance
Starting from the 6th of April 2023, there will be a significant change in the lifetime allowance, which represents the maximum amount of tax-free pension contributions that can be saved throughout one’s lifetime. Currently, the lifetime allowance stands at £1,073,100. However, it is important to note that until April 2024, the lifetime allowance charge will be completely eliminated. This transition ensures that no individual incurs this charge, providing a beneficial adjustment.
Income tax rates
The threshold for the highest earners will fall from £150,000 to £125,140 in April 2023. The other thresholds and income tax levels will stay the same:
- Personal allowance (0%): £12,570 (staying the same)
- Basic rate (20%): £12,570 to £50,270 (staying the same)
- Higher rate (40%): £50,270 to £125,140 (changing from £150,000 to £125,140)
- Additional rate (45%): Over £125,140
Minimum wage
National Minimum Wage will increase from £9.50 to £10.42 this tax year.
The new rates will be:
- National Living Wage (23 and over): £10.42 (increase from £9.50)
- 21-22: £10.18 (increase from £9.18)
- 18-20: £7.49 (increase from £6.83)
- Under 18: £5.28 (increase from £4.81)
Keep up to date with Husky
With Husky, you can rest assured that any changes will be seamlessly managed. We take care of your workplace pension and Salary Exchange schemes, keeping you well-informed about any legislative updates.
As an employer, entrusting Husky to handle your pension management allows you to concentrate on your core business operations without any concerns.
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