What Could the Budget Mean for Investors?

The contents of this article are accurate at the time of publishing, are for general information purposes only, and do not constitute investment, legal, tax, or any other advice. Before making any investment or financial decision, you may wish to seek advice from your financial, legal, tax and/or accounting advisers.  

The Spring Budget was announced by Chancellor Jeremy Hunt on Wednesday and included the abolishment of the pensions lifetime allowance (LTA). This governs how much individuals can build up within their pension before incurring a capital tax charge and was previously frozen at £1,073,100 until April 2026.

The pensions annual allowance (PAA) has also been increased to £60,000 from 6 April 2023, from £40,000 currently. This is the amount an individual can commit to their pension in a given tax year. Pension savers can also make use of a ‘carry forward’ initiative, which allows unused PAA from the previous three tax years to be topped up into a pension in the current year. Furthermore, should a pensioner begin drawing on their defined contribution pension, this would reduce the size of their allowed annual contributions to £4,000. Post-Budget, this restricted allowance – known as the money purchase annual allowance (MPAA) – will be upped to £10,000 from 6 April. 

Investors may be interested to hear that the deadline for voluntary National Insurance contributions (top-ups) has been extended from the turn of the tax year to 31 July 2023. This allows pension savers to ensure they make adequate annual contributions to qualify for the state pension. Understanding pensions can be complex and you may wish to seek independent advice or visit Pension Wise, a government-backed service offering free, impartial guidance to investors over 50.  

Another sea change in tax rules came in the form of a reduction in the Capital Gains Tax (CGT) annual exemption amount (AEA). Currently, the AEA stands at £12,300 for private individuals; this will reduce to £6,000 in the tax year starting 6 April 2023 and again to £3,000 during the tax year 2024-25. Gold, silver and platinum bullion coins from The Royal Mint are CGT exempt, due to their status as UK legal tender. You can find out more about the impact of CGT changes on investors in our recent article. 

In the wake of the Budget, the sterling gold price has outperformed, as the UK currency begins to fall against the dollar. Furthermore, the announced bailout of Credit Suisse this week sent shockwaves through the European banking sector. If credit conditions were to tighten in the midst of the recent news, this could impact UK growth, fiscal financing and the strength of sterling, which in turn could support the case for gold to form part of a well-diversified investment portfolio.  

If you are reviewing your pensions investment in view of the Budget announcements, you may wish to learn more about our Gold for Pensions offering. Investors can claim three months’ free vaulting on holdings by making an investment before or on 30 April.* Request a call back today by emailing us at financialproducts@royalmint.com. 

Following the Budget announcement, detailed legislation will be drafted by the Government later in the year.

* The offer will apply from the date of your first transaction in the offer period only, and will be applied to all holdings within your account as at this first transaction date (including the holdings of that transaction).