Savings and Pensions
Individual Savings Accounts (ISA)
The investment limits for 2024/25 remain £20,000 for a standard adult ISA (within which £4,000 may be in a Lifetime ISA – unchanged since 2017/18), and £9,000 for a Junior ISA or Child Trust Fund.
The Chancellor announced a consultation on a new ‘British ISA’, which would give an additional annual allowance of £5,000 to be invested in British companies. No date has been set for the introduction of this product.
Pension contributions (Table B)
In last year’s Budget, the limits on tax-advantaged pension savings were significantly raised: the Annual Allowance was increased to £60,000, and the Lifetime Allowance (LTA) Charge was abolished. No further changes were announced in the Spring Budget.
Although the LTA itself has now been formally abolished, the maximum amount that can be withdrawn as a tax-free lump sum remains 25% of the previous LTA (25% x £1,073,100 = £268,275) unless the person is entitled to ‘protection’ in relation to the original introduction of the LTA or any of the subsequent reductions of the limit.
The abolition of the LTA charge may encourage people who had stopped contributing to funds because they were over or near the LTA limit to consider further investments. The problem with pension schemes is that the rules change many times over the life of the scheme, and the most relevant ones are those in force when benefits are taken. A change of government could lead to a reintroduction of something similar to the LTA charge; that ought to be mitigated by transitional rules such as ‘fixed protection’, but it would be prudent to bear in mind that this very substantial tax cut for those with the largest pension pots might not be permanent.